[Senate Hearing 114-259]
[From the U.S. Government Publishing Office]
S. Hrg. 114-259
CREATING A MORE EFFICIENT
AND LEVEL PLAYING FIELD:
AUDIT AND APPEALS ISSUES IN MEDICARE
=======================================================================
HEARING
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
APRIL 28, 2015
__________
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COMMITTEE ON FINANCE
ORRIN G. HATCH, Utah, Chairman
CHUCK GRASSLEY, Iowa RON WYDEN, Oregon
MIKE CRAPO, Idaho CHARLES E. SCHUMER, New York
PAT ROBERTS, Kansas DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming MARIA CANTWELL, Washington
JOHN CORNYN, Texas BILL NELSON, Florida
JOHN THUNE, South Dakota ROBERT MENENDEZ, New Jersey
RICHARD BURR, North Carolina THOMAS R. CARPER, Delaware
JOHNNY ISAKSON, Georgia BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania MICHAEL F. BENNET, Colorado
DANIEL COATS, Indiana ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada MARK R. WARNER, Virginia
TIM SCOTT, South Carolina
Chris Campbell, Staff Director
Joshua Sheinkman, Democratic Staff Director
(ii)
C O N T E N T S
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OPENING STATEMENTS
Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman,
Committee on Finance........................................... 1
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 3
Carper, Hon. Thomas R., a U.S. Senator from Delaware............. 4
WITNESSES
Coston, Sandy, CEO and president, Diversified Service Options,
Inc., Jacksonville, FL......................................... 6
Naughton, Thomas, senior vice president, MAXIMUS Federal
Services, Inc., Reston, VA..................................... 7
Griswold, Hon. Nancy J., Chief Administrative Law Judge, Office
of Medicare Hearings and Appeals, Department of Health and
Human Services, Washington, DC................................. 9
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Carper, Hon. Thomas R.:
Opening statement............................................ 4
Prepared statement........................................... 19
Coston, Sandy:
Testimony.................................................... 6
Prepared statement........................................... 20
Responses to questions from committee members................ 26
Griswold, Hon. Nancy J.:
Testimony.................................................... 9
Prepared statement........................................... 37
Responses to questions from committee members................ 42
Hatch, Hon. Orrin G.:
Opening statement............................................ 1
Prepared statement........................................... 54
Naughton, Thomas:
Testimony.................................................... 7
Prepared statement........................................... 55
Wyden, Hon. Ron:
Opening statement............................................ 3
Prepared statement........................................... 63
Communications
American Occupational Therapy Association, Inc. (AOTA)........... 65
National Association for Home Care and Hospice (NAHC)............ 66
The Orthotic and Prosthetic Alliance (O&P)....................... 67
(iii)
CREATING A MORE EFFICIENT
AND LEVEL PLAYING FIELD:
AUDIT AND APPEALS ISSUES IN MEDICARE
----------
TUESDAY, APRIL 28, 2015
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 10:15
a.m., in room SD-215, Dirksen Senate Office Building, Hon.
Orrin G. Hatch (chairman of the committee) presiding.
Present: Senators Crapo, Thune, Wyden, Stabenow, Carper,
Bennet, and Casey.
Also present: Republican Staff: Chris Campbell, Staff
Director; Kimberly Brandt, Chief Healthcare Investigative
Counsel; and Jill Wright, Detailee. Democratic Staff: Joshua
Sheinkman, Staff Director; Jocelyn Moore, Deputy Staff
Director; Matt Kazan, Health Policy Advisor; Elizabeth Jurinka,
Chief Health Care Advisor; and Jennifer Phillips, Detailee.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
UTAH, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. The committee will come to order. Welcome to
everyone.
Our hearing today will consider audit and appeals issues in
Medicare. As some of you may recall, in July 2013 the Finance
Committee held a hearing focused on audits of Medicare
providers. At that time, Chairman Baucus and I were concerned
about some of the stories we were hearing from hospitals,
doctors, and others in the medical community.
That particular hearing gave us insight into some of the
problems audits pose for providers. Now we turn to an issue
that is directly tied to those audits, and that is Medicare
appeals. I hear a lot about this whenever I go home to Utah,
where Medicare issues remain a serious concern for my
constituents.
For the past 2 years, like many members here, I continually
hear about the terrible backlog of Medicare appeals. Before I
move on to the appeals process in detail, I want to mention
that improper Medicare payments continue to be a serious issue
and a big part of the reason that we are seeing such a backlog
in appeals.
Last month, the GAO released a report on government
efficiency and effectiveness. The report found that in fiscal
year 2014, Medicare covered health services for approximately
54 million elderly and disabled beneficiaries at a cost of $603
billion. Of that figure, an estimated $60 billion, or
approximately 10 percent, was improperly paid, totaling over
$1,000 in improper payments for every single Medicare
beneficiary.
These numbers are unacceptable. This error rate must be
lowered to ensure the viability of the Medicare trust fund so
that Medicare can continue serving beneficiaries for years to
come.
CMS has, of course, taken steps to identify and recover
improper payments, including hiring contractors to conduct
audits of the more than 1 billion claims submitted to the
Medicare program every year. These auditors have recovered
billions for the Medicare program, over $3 billion in 2013
alone. However, the increase in audits has led to a seemingly
insurmountable increase in appeals, with the current backlog at
over 500,000 cases, evidenced by that particular chart there.
This increase in appeals has resulted in long delays for
beneficiaries and providers alike. There are so many appeals
that the Office of Medicare Hearings and Appeals cannot even
docket them for 20 to 24 weeks. In fiscal year 2009, most
appeals were processed within 94 days. In fiscal year 2015, it
will take, on average, 547 days to process an appeal, far too
long for beneficiaries to find out whether their medical
services will be covered or for providers to find out if they
will be paid.
Additionally, large portions of the initial payment
determinations are reversed on appeal. The HHS Office of
Inspector General reported that, of the 41,000 appeals that
providers made to administrative law judges in fiscal year
2010, over 60 percent were partially or fully favorable to the
defendant.
Such a high rate of reversals raises questions about how
the initial decisions are being made and whether providers and
beneficiaries are facing undue burdens on the front end. On the
other hand, we need to recognize that ALJs have more
flexibility in their decision-making than Medicare contractors
do.
During the July 2013 hearing, we expressed our hope that
CMS would consider the balance between program integrity and
the administrative burden on providers. CMS has taken steps to
show it is considering that balance. These steps include
decreasing the burdens on providers, increased oversight of
auditors, and more transparency in the programs.
When any Medicare contractor, either an auditor or a
contractor that processes claims, decides that a claim should
not be paid, it has a real effect on beneficiaries and
providers, which is why it is so important that the appeals
process allow these appeals to be heard in a timely and
consistent fashion.
The Office of Medicare Hearings and Appeals has also taken
steps to address its backlog, but there is only so much the
agency can do with its current authorities and staffing.
Senator Wyden and I, and the other members of this committee,
are committed to finding ways to make the appeals process work
more efficiently and effectively in order to ease the burden on
beneficiaries and providers, and to protect the Medicare trust
fund.
Today we have the opportunity to hear from those who are
closest to the Medicare appeals process. I want to thank all of
our witnesses for appearing here today to help us understand
the issues that they face in dealing with the large number of
Medicare appeals. I do look forward to hearing their
perspectives on how that process might be changed to create a
more efficient and level playing field.
Let me turn now to my ranking member, Senator Wyden, for
his remarks.
[The prepared statement of Chairman Hatch appears in the
appendix.]
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman.
Mr. Chairman, since the days when I was director at the
home of the Oregon Gray Panthers, I have heard from seniors and
their providers how frustrating it can be to deal with the
arbitrary nature of the appeals process. Back in those days,
everybody was in the dark. Essentially, nobody knew what the
rules were, and there were no deadlines.
Now, some of those problems have been addressed. But today,
the system is still broken, and that is the bottom line. There
are new problems to confront, and today the backlog of cases is
so large that the door to new appeals is essentially closed.
New cases are no longer being heard.
So nobody is immune. Certainly not Oregon, where the
problem of clogged appeals is tragically real, and it is
something I hear about from seniors and their providers
continually.
Now, we are going to hear a lot of statistics today. The
numbers are big, and we are going to rattle them all off. The
number of cases sent to the Office of Medicare Hearings and
Appeals has soared from 60,000 to 654,000 over just a couple of
years. We are talking about a tenfold increase in just a couple
of years.
Now, one number that has not changed, and we ought to be
talking about that as well, is the number of hearing officers
handling cases. Today, about 60 hearing officers are available
to hear these cases, and that was the case back in 2011. So it
is no wonder that the appeals system is buckling under its own
weight, and that the average time to process a claim is now 560
days.
So these are important references, and I just want, in
closing, to say that, amid this blizzard of numbers and
statistics, the real story is what happens to seniors as they
try to navigate this system.
Here is a brief account of what happened to the late
Stephen Lessler. Like many seniors, Mr. Lessler had hip
surgery, and in 2013 he went to a nursing home for
rehabilitation. About 1 month into his rehabilitation, Mr.
Lessler was notified that his coverage under Medicare Advantage
would soon stop. He was encouraged by the progress he was
making, so he ultimately decided to pay out-of-pocket for
another week. He also appealed the denial to Medicare.
The process went on and on and on. After losing earlier
appeals, Mr. Lessler requested a hearing before an
administrative law judge in December of 2013. Not until August
of 2014--277 days later--did Mr. Lessler actually get a
hearing. Eventually, he received a favorable ruling on
September 24, 2014. Unfortunately, Mr. Lessler passed away the
day before, September 23, 2014, at the age of 92.
It seems to me, the Senate has a duty to ensure that
seniors receive the care that they are rightfully entitled to
under Medicare. The Senate has a duty, as custodians of
taxpayer dollars, to ensure those monies are spent in the best
possible way. My view is that balancing these twin goals is
going to take some fresh thinking.
Now, one idea is to allow less complicated and contested
cases to be handled by a different set of hearings officers so
that they can be processed more quickly. That would leave the
more complicated and difficult cases to administrative law
judges. Another idea would be to establish a refundable filing
fee to prevent providers who gamed the system from crowding out
those seniors whose cases need to be heard.
I want today's witnesses to give us their ideas for
reforming Medicare's appeals process. I want to hear their
thoughts on solving the problem and helping us creatively
squeeze every drop of efficiency out of our current system. I
do want to make clear that, with a tenfold increase in the
number of cases, I believe that additional resources are going
to be needed as well.
Efforts ought to be made to reduce the time it takes for an
appeal to make its way through the system. Finally, what is
needed is to prevent appeals from ever happening by getting it
right in the first place.
So, Mr. Chairman, I look forward to working with you. This
is an important hearing, and I think this is another area where
there is an opportunity for creative and bipartisan approaches
so that seniors get better and more prompt services and
taxpayers' interests are represented as well.
The Chairman. Well, thank you, Senator.
[The prepared statement of Senator Wyden appears in the
appendix.]
The Chairman. Before I introduce our witnesses----
Senator Carper. Mr. Chairman? Mr. Chairman? Could I just be
recognized for maybe 1 minute, please?
The Chairman. Yes.
OPENING STATEMENT OF HON. THOMAS R. CARPER,
A U.S. SENATOR FROM DELAWARE
Senator Carper. Thank you. I apologize. I appreciate the
chance to say something. My thanks to both of you for bringing
this important matter before the committee today. As the
immediate past chairman of the Homeland Security and
Governmental Affairs Committee, this is something we focus on a
lot. We focus on improper payments.
GAO tells us that improper payments last year totaled $125
billion, and more than a third of that is from Medicare. This
is real money. This is real money that we are interested in. We
need to save that money, as much of it as we can. We do not
need to create undue headaches for providers of health care.
So, this is important, trying to find the right balance. I am
very, very grateful--I have a statement I would like to submit
for the record, if I can.
We are having a mark-up on the Toxic Substance Control Act
in the Environment and Public Works Committee, pretty
contentious, and I need to be back there. We are going to try
to find the sweet spot. I think we have, maybe, and can pass
good legislation there. We can hopefully find a sweet spot in
this area as well. But thank you so much, and our thanks to the
witnesses. My apologies. Thank you.
The Chairman. Thank you, Senator. Your statement will be
placed in the record at the appropriate place. We are glad to
have you here when we can.
[The prepared statement of Senator Carper appears in the
appendix.]
The Chairman. Now, before I introduce the witnesses, it is
my understanding that we have some special guests with us
today. I would like to extend a warm welcome to the delegates
from Afghanistan and Nepal who are joining us today. The Afghan
delegation includes members of both houses of Afghanistan's
national assembly. From Nepal, the delegation includes members
of Nepal's constituent assembly.
The entire committee was deeply saddened to hear of the
earthquake that struck Nepal on Saturday, and we do offer our
condolences and our profound sympathy for all of those who have
been affected. We certainly welcome you to this country, and to
this hearing in particular, and hope you enjoy listening to
these experts on this very important subject. We are grateful
to have you here. We hope you enjoy your time while you are
here in Washington, and especially in the U.S. Senate.
Now, turning to today's hearing, our first witness is Sandy
Coston. Ms. Coston is the CEO and president of Diversified
Service Options--we will call it Diversified--and its wholly
owned subsidiaries, First Coast Service Options and Novitas.
First Coast and Novitas provide administrative services for
processors for government-sponsored health care programs such
as Medicare. In her role, Ms. Coston sets the strategy and
vision and provides executive leadership for the Diversified
enterprise. She has accountability for government contracts
administration, including Parts A and B Medicare administrative
contractor contracts, as well as managing a national provider
reimbursement set of programs for undocumented alien emergency
services and a financial management services contract for the
national marketplace.
Our next witness is Tom Naughton. Mr. Naughton serves as
senior vice president of MAXIMUS Federal Services, a subsidiary
of MAXIMUS, Inc. that is dedicated to serving government
agencies and programs. In that role, Mr. Naughton is
responsible for the management and performance of MAXIMUS
Federal's largest book of business: insurance benefit appeals
and independent medical review services. His client base
includes more than 48 State and Federal agencies.
Our last witness today is Judge Nancy J. Griswold. Judge
Griswold was appointed Chief Administrative Law Judge for the
Office of Medicare Hearings and Appeals on March 1, 2010. In
this capacity, she oversees the third level of review for
Medicare appeals within HHS and has responsibility for the
second-largest administrative law judge corps in the Federal
system.
In June of 1995, Judge Griswold began her Federal career as
an ALJ in the Shreveport, LA Social Security Office of Hearings
and Appeals. She served as the Hearing Office's Chief ALJ from
2002 until 2004, when she was appointed as acting, and then
permanent, Regional Chief Judge for the Boston region. She was
then promoted to Deputy Chief ALJ at Social Security, where she
served as alter-ego for the Chief ALJ and worked closely with
him on the formulation of Social Security's extremely
successful backlog elimination plan.
During her tenure as Deputy Chief ALJ, the Social Security
Administration reached new levels of productivity and, I might
add, prior to her departure had driven the backlog down for 14
successive months. She also had oversight of the ALJ hiring
program at Social Security and recommended over 300 ALJs for
appointment during her tenure. As Deputy Chief ALJ for Social
Security, she assisted the Chief Judge in the management of
over 8,000 employees, including 1,200 ALJs in 142 hearing
offices.
So I want to thank you all for your willingness to come and
be with us and to help us to understand these very important
issues here, and I guess we will start with you, Ms. Coston.
STATEMENT OF SANDY COSTON, CEO AND PRESIDENT, DIVERSIFIED
SERVICE OPTIONS, INC., JACKSONVILLE, FL
Ms. Coston. Thank you. Good morning, Chairman Hatch,
Ranking Member Wyden, and distinguished members of the
committee. It is my honor to be here today to testify before
you.
As the chairman mentioned, we are a Medicare Part A and
Part B administrative contractor, or a MAC, for 12 States and 3
U.S. territories, representing approximately 32 percent of the
traditional Medicare program across our Nation.
The focus of my testimony today will be on ways to
streamline the appeals process and to help in reducing the
backlog, as previously mentioned. As a MAC contractor, one of
the things that we do is we process the initial claims, and we
also have accountability to process the first level of appeal.
When we receive appeal requests, we go through a process of
triaging those requests and make a determination as to whether
or not the appeal is valid. About 60 percent of the cases we
receive actually turn out to be valid appeal requests.
The remaining 40 percent we handle administratively through
either an inquiry response, or perhaps a clerical error
reopening. This triage process is important so that we
determine the appropriate course of action to take. The second
through the fifth level of appeals are handled by other
entities than us, and those are described in more detail in
Exhibit 1 of my testimony.
I want to talk a little bit about what we have seen as a
MAC contractor, and the genesis of the appeals backlog. Over
the last several years, the number of entities that are
involved in the evaluation of claims has increased
dramatically, as has the number of claims being scrutinized. In
addition to the MAC contractors, these entities include the
Zone Program Integrity Contractors, the Comprehensive Error
Rate Testing Program Contractors, and the Recovery Audit
Contractors. Our experience has shown that the most significant
contributor to the changes in the volumes of appeals has been
the recovery auditor. Using First Coast Part A claims data as
an example, the overall percentage of appeals driven by the
recovery auditor decisions jumped from 7 percent in 2011 to 63
percent in 2013. Similarly, the overall volume of appeals went
from approximately 23,000 to 66,000.
To date, a number of actions have been taken by CMS and the
Office of Medicare Hearings and Appeals to relieve that backlog
that primarily exists at the third level, or the administrative
law judge level.
We have several recommendations that may effectively reduce
the backlog of appeals at the ALJ level and be able to keep the
backlog down. First, we recommend that we remand cases to the
prior level or the second level of appeal, which are processed
by the Qualified Independent Contractor, when the ALJ finds
good cause for the submission of new evidence. In cases when
the new evidence is submitted at the ALJ level, remanding these
cases back to the second level or to the QIC for handling would
result in a reduction at the ALJ level and, ideally, quicker
resolution for the provider. Further, handling these cases at
an earlier level of appeal not only preserves the ALJ level for
the provider when needed, but reduces the expense of having the
MAC and the QIC prepare for and participate in cases that could
have been resolved based upon the introduction of new evidence.
Additionally, for the appeals that are favorable, there is a
significant cost avoided by the ALJ and the provider, and
likely the provider would receive payment sooner.
Our second recommendation is to establish a per-claim
filing fee, as previously mentioned by the chairman. Our
recommendation to streamline the appeals process would be to
modify the work that the MAC does at the first level of appeal.
We would recommend that we retain that triaging process to
make sure that we validate which are valid cases for appeal,
and then we would also recommend that, for those appeals that
are clinical in nature, they go directly to the second level
while we retain just the administrative, non-medical-necessity
appeals.
In eliminating this level of appeal of non-clinical
appeals, we would also recommend that the funding be retained
to further educate the provider community on how to
appropriately address those claim denial findings that we see.
In closing, we appreciate the leadership of this committee,
and we thank you for the opportunity to provide our point of
view and look forward to questions that you may have.
The Chairman. Well, thank you.
[The prepared statement of Ms. Coston appears in the
appendix.]
The Chairman. Mr. Naughton, we will take your testimony at
this time.
STATEMENT OF THOMAS NAUGHTON, SENIOR VICE PRESIDENT, MAXIMUS
FEDERAL SERVICES, INC., RESTON, VA
Mr. Naughton. Thank you, Committee Chairman Senator Hatch,
Ranking Member Senator Wyden, and honorable members of the
committee, for providing us the opportunity to discuss the
Medicare appeal process and potential efficiencies and
enhancements to that process.
Since 1989, MAXIMUS Federal Services and our affiliates
have served as a Qualified Independent Contractor for the
Centers for Medicare and Medicaid Services. In that role, we
have completed more than 2 million Medicare appeals across all
parts of Medicare, addressing all forms of Medicare benefit and
payment disputes.
Our QIC work is the hallmark of our largest market segment:
independent benefit appeals and independent medical review. We
are the largest provider of these services in the United
States, and we currently serve more than 50 Federal and State
agency clients.
I would note that MAXIMUS--and the company we are owned by,
MAXIMUS, Inc.--is a government-only company. We do not provide
any services or have any contracts with health care providers
or health care payers. The independence is part of our mission,
and it is a statutory requirement of our QIC contracts and
Medicare contracts we administer throughout the United States.
Pursuant to section 1869 of the Social Security Act, a
Qualified Independent Contractor is defined as ``an entity or
an organization that is independent of any organization under
contract with the Secretary that makes initial
determinations.'' The organizations encompassed within the
meaning of section 1869 include, but are not limited to,
Medicare Administrative Contractors, Zone Program Integrity
Contractors, Recovery Audit Contractors, and Quality
Improvement Organizations.
The primary goals of the QIC program are timely
adjudication of reconsiderations--that would be the level two
of appeal; case management of those appeals within the Medicare
appeals system; and assuring timely and appropriate
communication to the first level of appeal at the MACs or, on
the Part C and the Part D side, Medicare Advantage plans and
Medicare drug plans, as well as communicating with the ALJs at
the third level of appeal.
Similar to all stakeholders within this appeal process,
within recent years the QICs have experienced unprecedented
volumes. Nowhere was this more evident than in our Part A
program, where, if you look at the chart here, you can see
volumes growing exponentially over just a few-year period.
Just as an example, in February 2010, we received a total
of 4,900 appeals. In February of 2012, we received a total of
12,000 appeals--just in the month of February--for that Part A
program, which is an increase of 159 percent. In February 2015,
we received 45,000 appeals, an increase of 253 percent over
2012 and an increase of 815 percent in the prior 2-year period.
This influx of appeals created a backlog and created
significant issues for our infrastructure, and we were forced
to act quickly to address this backlog and to ensure that these
appeals were adjudicated as quickly and as appropriately as
possible. We accomplished that through technology, through
adding resources. You can see that we went from fewer than 30
clinical staff in the Part A program to over 140 in that Part A
program. But more importantly, we changed our processes and
created specialized teams to address specific appeals.
This change in process led to an end to the backlog which
began in the spring of 2013 and was cleared by the fall of
2013. And with the change in this technology, additional staff,
and processes, we have been able to avoid further backlogs
since 2013.
Based on those lessons learned, we have a number of
recommendations which we think will continue to help the
appeals program evolve and provide more efficient services to
beneficiaries, providers, and all stakeholders.
I think the number-one issue for the current backlog would
be to create a support unit for the ALJs. This was an idea that
was considered back in 2004 prior to the ALJs coming to OMHA in
2005, in which attorneys, nurses, physicians, certified coding
specialists, other subject matter experts would provide support
to the ALJs and help them make decisions and adjudicate the
claims in a more timely fashion.
I think in this issue, as was mentioned by Chairman Hatch,
taking the less complicated appeals and having subject matter
experts address those appeals for the ALJs would help address
the backlog quickly. I also think creating a Recovery Audit
Contractor-only QIC, so that a QIC specializes in audit
contractor appeals, would help educate the program, assist all
the stakeholders in adjudicating those appeals, and give us a
centralized resource to understand exactly what is going on
with the audit contractors and at all levels of appeals.
I also agree with all of the recommendations of Ms. Coston.
I think other recommendations would be to change audit
contractor pricing to a per-case review, or to a more
definitive cost, and do away with contingency pricing. That
seems to cause concern for stakeholders, and I think there are
ways to pay the audit contractors other than through
contingency pricing.
I think enhancing the scope of work for the Administrative
QIC to provide greater education to all stakeholders would be
helpful, and I also think, if we do not provide support to the
ALJs through providing subject matter expertise, allowing the
QICs to participate in a greater percentage of hearings would
be helpful for adjudicating those hearings and getting a more
consistent decision for those hearings.
Just as an example, in 2014 we participated in less than 5
percent of Part A hearings. The uphold rate for our decisions
in which we participated was 66 percent, and, in hearings where
we did not participate, the uphold rate was 37 percent--
obviously a large difference between when we are participating
and not participating.
I look forward to having further discussions on these
potential efficiencies and enhancements, and thank you again
for your time.
The Chairman. Well, thank you.
[The prepared statement of Mr. Naughton appears in the
appendix.]
The Chairman. Judge Griswold, we will turn to you to wrap
up here.
STATEMENT OF HON. NANCY J. GRISWOLD, CHIEF ADMINISTRATIVE LAW
JUDGE, OFFICE OF MEDICARE HEARINGS AND APPEALS, DEPARTMENT OF
HEALTH AND HUMAN SERVICES, WASHINGTON, DC
Judge Griswold. Chairman Hatch, Ranking Member Wyden,
distinguished members of the committee, it is my honor to be
with you today to discuss proposals for creating a more
efficient process for Medicare appeals.
Chairman Hatch, I want to thank you and Senator Wyden and
your staffs for your interest in resolving the challenges that
are being faced by the Medicare appeals process. I also want to
thank Secretary Burwell for her commitment to restoring the
balance between the Department's audit efforts and its
responsibility to provide a high-quality and timely appeals
process.
Three separate agencies within HHS are charged with
administering the Medicare appeals process, with OMHA being
generally responsible for the third level of review. OMHA was
established in June of 2005 with the goal of reducing the then-
average 368-day waiting time for a decision to the 90-day time
frame established in the Medicare, Medicaid, and CHIP Benefits
Improvement and Protection Act of 2000.
In order to make certain that OMHA's adjudicators would
have decisional independence from CMS, OMHA was established as
a separate agency reporting directly to the Secretary, having a
second appropriation, and operating, both functionally and
fiscally, separately from CMS.
We are grateful for the enacted funding increases in fiscal
years 2014 and 2015 which have allowed for the hiring of 12
additional ALJ teams and the opening of a fifth field office.
However, even this additional capacity pales in comparison to
our incoming adjudication workload. In fiscal year 2013 alone,
OMHA received over 384,000 appeals and, in fiscal year 2014,
approximately 474,000 appeals. Although ALJ teams more than
doubled their disposition capacity from fiscal year 2009
through fiscal year 2013, they have not been able to keep pace
with receipt levels, and adjudication times have now increased
to 572 days.
Several reasons for the increase in appeals can be
identified. In fiscal year 2010, OMHA began to take on new
workloads, including appeals resulting from the nationwide
implementation of the Recovery Audit Program. There have also
been increases in appeals filed by Medicare State agencies and
in OMHA's traditional workload. Finally, Medicare enrollment
has grown as the baby boom generation becomes Medicare-eligible
and as younger individuals have been added to the disability
rolls and become eligible for Medicare benefits as well.
In response to this record growth, OMHA has taken a number
of administrative actions, most significantly through ongoing
development of an electronic case processing system and
standardized business process. We have also enhanced our
adjudication training programs. As part of its Settlement
Conference Facilitation Pilot, OMHA has resolved over 1,000
appeals, which represents the average productivity of an entire
ALJ team working for a full year.
The President's 2016 budget request would increase OMHA's
current budget from $87.3 to $270 million and would allow us to
add 119 new ALJ teams and 82 Medicare magistrates, increasing
adjudication capacity from 77,000 to approximately 278,000
appeals per year. The President's budget also proposes seven
legislative reforms: expanding the Secretary's authority to
retain a portion of recoveries from the Recovery Audit Program
to fund the related appeals process at OMHA; establishing at
the fourth level, the Departmental Appeals Board, a refundable
per-claim filing fee; allowing sampling and consolidation of
similar claims without appellant consent; requiring remand of
appeals upon introduction of new evidence; increasing the
minimum amount in controversy required for adjudication by an
ALJ to the amount required for judicial review; establishing a
Medicare magistrate program for appeals falling between the
current amount in controversy and the new amount required for
an ALJ hearing; and finally, providing for resolution of
appeals having no material fact in dispute when the decision is
governed by a binding authority.
OMHA is privileged to have a dedicated and innovative
workforce of ALJs and staff, who are committed to processing
Medicare appeals that are both timely and reflect the highest
quality of
decision-making. However, administrative initiatives alone are
insufficient to close the gap between workload and resources at
OMHA.
The Department believes that the funding and legislative
proposals contained in the 2016 President's budget will begin
to close this existing resource gap, and I look forward to our
dialogue on these issues today. Thank you.
[The prepared statement of Judge Griswold appears in the
appendix.]
The Chairman. We appreciate all three of you and the hard
work that you are doing. We are naturally very interested in
what you are doing. Your organizations really are very
important to our society, especially as they process these
appeals quickly and efficiently.
Now, as I mentioned before, the backlog of appeals has real
monetary implications for beneficiaries and basically everybody
else, including our government. The beneficiaries and providers
are both very concerned, and my colleagues and I are concerned
about it as well.
Now, each of you represents a different level of the
appeals process. We understand that handling a large volume of
appeals is a daunting task, and the American people place a
great deal of trust in you, and of course your important work.
My colleagues on this committee and I are committed to
improving this system, and there are, in our opinion, a wide
variety of approaches that must work in tandem if the process
is to be reformed.
I would like to ask each of you to explain your
organization's role in the appeals process and your biggest
challenge. You have basically explained your role, but give us
the biggest challenge in fulfilling your role as you see it. We
can start with you, Judge. Why don't we just go across?
Judge Griswold. Well, we are an ALJ organization,
administrative law judges, and our judges hold hearings in
accordance with the Administrative Procedure Act. I think our
biggest challenge right now is to handle the incoming workload.
We are keenly aware of the impact that these delays are having
upon our stakeholders, the people who file appeals before us.
So, if I could expand to two challenges, I think one is to
go to a fully electronic system. We are in that process right
now, and that will gain us some efficiencies, but it is a
multi-year project. Then the second would be just simply our
capacity to handle the incoming receipts.
The Chairman. Well, thank you.
Ms. Coston?
Ms. Coston. Thank you. I would describe our biggest
challenge as beginning with the processing of the claims. We
receive a significant portion, probably the high 90th
percentile of claims, electronically. Those claims process
through CMS's standard systems. There is a separate Part A and
a Part B system. They process through that system, and we touch
about 5 percent of those claims, so about 95 percent process
automatically.
There are edits and audits within the system that, if
claims meet certain criteria, they will suspend for manual
intervention, but we do not receive medical records on the
front end to be able to process those claims. So I know, Mr.
Chairman, when you talked about the overturn rate, one of the
challenges that we have is that we adjudicate claims without
medical records.
So, when we ultimately would deny a claim and it is
appealed, that is really the first look we get at the medical
record behind that claim, unless of course we have a provider
that is on pre-payment review--and we do have providers that
are on pre-payment review based on data analytics. If they show
aberrant behaviors, we will put them on pre-payment review.
But I think really just understanding that the process by
which we are held accountable--we do not really see that
medical documentation until that appeal is filed, so it is
really about education to the provider community to make sure
that they are appropriately documenting that medical record. So
often, the improper payment rate that you have referred to, is
driven by lack of appropriate documentation.
It is not that we are necessarily challenging that the
services were medically necessary, it is that the providers are
not adequately documenting that in the medical record. Thus,
part of our recommendation is to increase the level of
education to make sure those claims are appropriately
documented so that, when they are denied, upon appeal we can
see in the medical record that they were in fact medically
necessary.
The Chairman. Well, thank you.
Mr. Naughton, let me just ask you this question. I could
say to each of you, you could answer this question: providers
report that the use of different appeals numbers at various
levels of appeal is confusing and does hamper efficient
tracking. Might you all consider implementing a uniform
docketing system across various levels of appeal? I just would
like--what do you think about that, Mr. Naughton?
Mr. Naughton. Well, we would consider that, and I think we
recommended that previously. One of the largest process issues
for all stakeholders--and it has been referred to by Ms. Coston
and Judge Griswold--is that there is not full electronic
communication between all levels of appeal.
Currently, we may be receiving electronic records. We then
download them, print them, box them up and send them to the
ALJ. If we were able to create a centralized database and a
system for all parties to the appeal process, first of all, we
would all know what the full record is.
There would be no dispute of what the entire record is, and
we would have access to that, and it would provide much greater
transparency and visibility to providers to understand where
their case file is, when it is expected to move, and what are
the documents associated with that case file.
The Chairman. Well, my time is up, but, Judge Griswold, it
seems to me that the judges could standardize case
administration so there is a uniform system of hearing
instructions and processes. So, you might take that under
consideration and see if you could recommend how to resolve
that particular problem.
Senator Wyden?
Senator Wyden. Thank you, Mr. Chairman. Mr. Chairman, I
also want to extend our condolences to our delegation from
Nepal. I believe they are in the audience now. We are glad you
are here, and we look forward to talking with all of you about
issues and a happier time for your country.
Let me start with you, Judge Griswold. I want to start with
what I described in my opening statement, which is what this
really means for seniors. The Center for Medicare Advocacy is
one of our most influential and prestigious organizations
advocating for the rights of seniors. They filed a class
action, as I think you know, requesting relief for all of the
seniors who have been up against these interminable delays.
Mr. Lessler, the case that I mentioned, was one of those in
the class. As you know, Mr. Lessler essentially got a refund
after he died. He had been in the system, just kind of bouncing
around in the system, for what was an interminable period.
So to me, what this is really all about is not just these
statistics and legalistic terms about various kinds of
procedures, but the bottom line for me is, how do you keep that
from happening again?
So, I think what I would like to do is have you start and
tell us what might help generate the kind of urgency that it is
going to take in a challenging Congress to actually get this
done. Because to me, to hear a story like Mr. Lessler's, where
everybody says, ``gee, that is awful,'' and then everybody kind
of goes about their business, reading position papers and the
like, that is not what this is about. This is about keeping
this from happening again. What do you think is necessary to do
that?
Judge Griswold. Well, at the Office of Medicare Hearings
and Appeals, we definitely feel the urgency, because we are
dealing with this pending level, which now comes in right at
about 870,000 pending appeals at our level. So we definitely
feel that. I think that what you are talking about, though,
when you take those numbers and you start translating them into
real-life stories and real-life impacts, I think that is what
is needed.
Senator Wyden. So what is needed to keep it from happening
again?
Judge Griswold. I think that we need to look at two pieces
of it. One is dealing with the number of receipts that are
coming in the door. There are a number of things that could be
done on that end. The filing fee. This proposal for a
refundable filing fee is one of those proposals that would
impact the number of cases coming in.
We have found that in 2015, 51 percent of our incoming
appeals had been filed by 5 appellants. So I think the filing
fee would encourage appellants to take a closer look at what
they are appealing and to be a little more discriminating in
what they bring before us.
Senator Wyden. I think that last point is an important one
to note. The Inspector General found that essentially this very
small number of providers account for a very substantial number
of the appeals.
For you, Ms. Coston, and you, Mr. Naughton, your general
finding is that a small number of providers are essentially the
challenge. So what we ought to do is really laser in, in terms
of tracking those people, monitoring those people, and
watchdogging that population. Do you share that view, Ms.
Coston?
Ms. Coston. I do not think we see that so much at the first
level. But to add to Judge Griswold's comments on your prior
question, one thing that we see is there is--at the different
levels, new evidence can be introduced.
So, when we make a determination on the first level of
appeal, we might not have as much information as the ALJ does
when the appeal goes to their level. So one thing that we would
recommend is that all evidence be introduced at the first level
of appeal, and then perhaps we can resolve these appeals much
sooner without escalating to the higher levels.
Senator Wyden. That sounds logical. Maybe it is too much
for Washington, but it certainly sounds logical to me.
The Inspector General's report says that providers who have
the resources almost automatically appeal. They just
automatically appeal because they have a good shot at getting a
favorable decision and getting people to settle. Is that
something that you have found, Mr. Naughton, this process of
sort of figuring you can beat the odds?
Mr. Naughton. Yes.
Senator Wyden. You automatically appeal? Just do it sort of
by rote and figure you can win?
Mr. Naughton. So, a couple points. In most appeal programs,
it is usually a 20/80 problem, where 20 percent of the
population is 80 percent of the appeals. I think in the audit
contractor world, it is even greater than that, and I would
agree that 5 percent is probably responsible for the majority
of all appeals.
I would also agree that these providers with resources--we
know for a fact they are engaging high-powered law firms to
represent them at ALJ hearings where the ALJs may have no
support or no one is representing the other side of the story.
And certainly they know, if we continue to appeal this, our
odds of our winning are greater because we have the resources
to get behind this and make sure we win it.
Senator Wyden. Well, we are going to follow up with you on
this, because my point is that the vast majority of providers
are honest and straightforward in terms of their dealings with
patients and taxpayer dollars. But clearly there is a small
number that has figured out a way to really hotwire the system,
to just game it and, like you say, play the odds. I think Ms.
Coston's point about trying to get the evidence earlier in the
process strikes me as sensible.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Stabenow?
Senator Stabenow. Thank you very much, Mr. Chairman and Mr.
Ranking Member. Welcome to all of you. Let me just first say
that Medicare is an incredibly important health care system,
and has been since it was enacted in 1965. We want to make sure
that it continues to be affordable and comprehensive and that
it is a guaranteed program.
I do have to say that, as we are getting ready to see the
final budget come forward from the conference committee between
the House and the Senate, I am very, very concerned about the
billions of dollars being cut in that budget resolution, which
is a broader discussion beyond today. But for the record, I
continue to be very concerned about the cuts to Medicare and
the attacks on the guaranteed system of Medicare. But it is
incredibly important that we address fraud and abuse and that
we are able to have a system with integrity, which is what all
of you are talking about.
So, a couple of questions. It is very important that we
have a system that works, that is timely. My question relates
to how we get ahead of this on the front end. We have a system,
the Recovery Audit Program, that holds potential to do that.
However, the high likelihood that appeals are found in favor of
the provider on the one hand, not the auditor, suggests that we
need updating. So the cases are being brought, but then the
appeals are being filed and then the majority of the appeals,
as I understand it, are found in favor of the provider.
So on the one hand, we need oversight, and on the other
hand, we need to make sure we have quality health care. So,
when you think about the appeals backlog and the dollars spent
in this whole process, I am wondering if each of you can
suggest some ways on the front end to ensure that providers
understand the evolving payment procedures, have clear
expectations on the front end, and then second, Ms. Coston, you
spoke about--and any of you can talk about this--the Recovery
Audit Contractors. I realize none of you is in that end of
things, but you mentioned the claims going from 7 percent to 63
percent.
Again, on the front end, as we look at how to get ahead of
this, I am very concerned and really question at this point--
that system is on a contingency basis, so each claim that is
denied and money that is clawed back, then, as I understand it,
funds the system, funds the audits, the auditors.
So I am concerned that if the hospitals are bearing the
full cost of appealing the auditors' findings, I do not know of
any consequences on the auditors' end for those outcomes. So if
a majority of them end up siding with the provider, but yet the
incentive is to deny the claim in that piece of it, it seems to
me like we ought to be focused on some changes and getting this
right on the front end.
So on the front end, I guess I would ask each of you--
first, Ms. Coston, since I mentioned your comments--what should
we be doing on the front end? Do we have the incentives, at
least for part of this, in the wrong place? What should we be
doing working with providers on the front end?
Ms. Coston. Sure. Sure. Well, and to reiterate, I think
there can be more education with the provider community to help
them understand how to document that record and file the claim
correctly the first time. So I think that is number one.
Number two, as I mentioned, to be able to require the
provider to submit all evidence at the first level of appeal
would be helpful. I think that CMS has made some strides with
the recovery auditors in terms of, there was a moratorium for a
while because the recovery auditors were focused primarily on
Part A claims, which are the very high-dollar claims, and that
is where we saw the significant spike on the Part A side in
that time period that I mentioned, because it was financially
advantageous for the recovery auditors to focus on the Part A
claims.
CMS has also instituted the limit on the number of claims
that the recovery auditors can look at, and they have to vet
the services that they want to look at with the agency ahead of
time. So I think there have been some things that have been
implemented to try to reduce that heavy burden of those Part A
appeals.
Senator Stabenow. Let me just ask, if I might interrupt in
the interest of time, do you think it makes sense that the
Recovery Audit Contractors are paid on a contingency basis for
each claim they deny? Is that the right incentive?
Ms. Coston. That payment system has actually been changed--
--
Senator Stabenow. It has been?
Ms. Coston [continuing]. So that if indeed there ultimately
ends up being an overturn of the recovery auditors' decision,
that fee is no longer available to them. So initially, when the
Recovery Audit Program was rolled out, they retained the
contingent fee no matter what, but that has changed.
Senator Stabenow. Does anyone else want to comment? I know
my time is up.
Mr. Naughton. I do think on the front end, again as I
mentioned in my testimony, putting an end to the contingency
payment can be done. It can be determined. We believe there is
$500 million out there for you to get. If you get $500 million,
we will pay you $50 million. If you do not reach that, you will
get paid less; if you get more, you will be paid more. So there
are ways to pay them outside of contingency on a per-claim
basis.
All QIC appeal programs are on a per-claim basis, so I
think that is something that can be considered and is a
possibility. I think at the level two, greater outreach,
education to the providers, greater transparency of what is
going on with the appeals to the providers, and providing
providers the resources they need to understand what is going
on with their appeal and the reasons for the denials, will help
educate and prevent a high level of appeals going forward.
Senator Stabenow. Thank you. I realize my time is up, Mr.
Chairman. Thank you.
The Chairman. Thank you, Senator.
Senator Casey?
Senator Casey. Thank you, Mr. Chairman. I appreciate the
hearing, and I want to thank our witnesses for being here.
Judge, I want to start with you. We know from the testimony
today and from all of the evidence that is presented that this
is a system that is stressed. That might be an understatement.
We also know that the funding here is in the discretionary
category and that the President's budget has included a
proposal to access funds recovered by the so-called Recovery
Audit Contractors.
I guess the main question I have is one of resources. I
think the operative word would be ``additional.'' What
additional resources would allow you to operate more
efficiently and process appeals more efficiently?
Judge Griswold. Well, the $270 million which is in the
President's budget would allow us to hire 119 ALJ teams, which
essentially means 119,000 additional appeal dispositions per
year. In coordination with other legislative proposals, we
would also look at hiring magistrates, which would essentially
be like a small claims court. These are individuals who would
be less costly for us in terms of their team support, but they
would be processing right at that same number. We project about
1,000 appeals per magistrate. They would be handling appeals
that would fall between the current amount in controversy,
which is $150, and the Federal court limit, which is right now
$1,460.
Our thought with this is that the ALJ is really the one who
prepares a record that is prepared in accordance with the APA
and that is suitable for going to Federal district court. If
the claim or if the case cannot get to Federal district court
because of the amount in controversy, it makes sense to have
that adjudication done by a less-costly official. So we think
that with that combination of adjudicators, additional ALJs,
and the Medicare magistrates, we would be able to up our
disposition capacity from 77,000 per year, roughly, to 278,000
per year.
Senator Casey. Say that last number again.
Judge Griswold. Two hundred and seventy-eight thousand
appeals per year.
Senator Casey. From?
Judge Griswold. From 77,000.
Senator Casey. Seventy-seven? All right.
Judge Griswold. Right. Because we currently have 77,000, or
will May 3rd. We have five new judges reporting May 3rd, and so
we will have a capacity of 77,000 per year, given the current
budget.
Senator Casey. I appreciate that. I realize this is ground
you already may have been plowing, as I was in and out today,
but I am a great believer that resources matter, especially
when you can very specifically focus on what resources would be
used for. You can make the nexus as, I think, taxpayers have a
right to expect, that we can make the case or the connection
between an expenditure, the hiring of more judges, or the
investment of greater resources----
We have a similar problem in other parts of the Federal
Government. We have, for example, black lung cases. This is the
perfect storm: case numbers going up; the number of
administrative law judges going down. That is a recipe for
major problems.
I guess in the remaining time, I have just one kind of
broad question, if it is possible for any one of the three of
you, or more than one, to kind of walk through an example of an
appeal as it winds its way through the process and kind of the
time line, if you can do that.
You may have already done it with regard to your testimony,
but just kind of, what is the typical case, especially in terms
of time line, and why is that emblematic of, or an example of,
what the problem is? Does that make sense? You have 16 seconds.
[Laughter.]
Ms. Coston. So we are the first level of appeals, as I
believe I had mentioned earlier. Currently, I would say
generally we are processing appeals timely. We are at the
workloads that we expect. We have 60 days to process appeal
cases. After the claim is processed, the appellant has 120 days
to file that appeal. So depending on how long they take, we are
generally processing within the 60-day time frame.
Mr. Naughton. And we are the second level of appeal, and
our time frames, depending on the case type, can be 72-hour
expedited, 30-day pre-service appeal, or a 60 calendar-day
retrospective appeal. At our level of appeal, all cases
involving medical necessity are reviewed by a physician, which
is different from some of the other levels of appeal. When we
have completed our part, we can move to the ALJ.
Senator Casey. Great. Well, thanks very much. I know we are
out of time.
Thank you, Mr. Chairman.
The Chairman. Well, thank you. I want to thank our
witnesses for appearing here today. I also want to thank the
Senators who were able to participate, given our busy day
today. It is one of the worst busy days we have had around
here.
This is an important issue, but the committee needs to give
some thoughtful consideration to it in terms of legislative
solutions. I do appreciate all three of you and your
participation here today.
Any questions for the record should be submitted no later
than Tuesday, May 5th.
With that, we will put the committee into recess. Thanks so
much for being here. I appreciate you.
[Whereupon, at 11:16 a.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Hon. Thomas R. Carper,
a U.S. Senator From Delaware
Without doubt, we must ensure that Medicare continues to provide
critical care to our nation's seniors and at the same time finds ways
to contain the growth of health care costs. I believe we can do both.
And one critical approach for an effective, and cost-effective,
Medicare program is to have appropriate and smart oversight and
auditing.
We need to make sure that taxpayer dollars are spent on appropriate
health care services that are needed by Medicare beneficiaries. The
Government Accountability Office estimates that almost $46 billion of
the Medicare fee-for-service expenditures were lost due to improper
payments in the last fiscal year. Unfortunately, that level has been
increasing during the past few years.
Medicare oversight and audits are conducted by a number of
different types of oversight contractors working for the Centers for
Medicare and Medicaid Services (CMS). Not surprising, the alphabet soup
of oversight can be confusing to anyone. My staff has heard complaints
regarding reviews of Medicare claims conducted by each type of audit,
and the ongoing and understandable confusion about which auditor is
looking at a claim. In addition, I have heard from Delaware hospitals
about the financial burdens placed on health care providers from the
oversight of Medicare claims by CMS and its audit contractors. Clearly,
we can do a better job to identify unnecessary and ineffective
oversight steps that put a burden on doctors, hospitals and other
providers, and make sure CMS has a better process to help providers
make their way through the maze of audits and rules.
Furthermore, a key element of the Medicare auditing programs is to
prevent overpayments before they are made. When a consistent error or
payment vulnerability is identified by the auditing contractors,
Medicare officials are supposed to keep track of the problem. CMS is
then supposed to address the problem, by either changing how payments
are approved and reviewed, or by communicating a solution or
clarification to the health care provider community. However, I
understand that a change in law is needed to allow some of the Medicare
overpayment recoveries to be used for this outreach, which of course
would help prevent future overpayment and reduce the burden on
providers.
As the Members of the Senate Finance Committee are well aware, the
Medicare ``doc fix'' legislation--also known as the Medicare Access and
CHIP Reauthorization Act--was enacted earlier this month. The
legislation included some very good improvements to program integrity,
including how CMS and its contractors reach out to health care
providers to ensure a strong understanding of Medicare payment rules. I
was also happy that the ``doc fix'' legislation included some important
provisions of a bill I introduced this year, called the Preventing and
Reducing Improper Medicare and Medicaid Expenditures Act, that consists
of a range of steps to prevent waste and fraud. However, one provision
of my legislation that did not make it into the new ``doc fix'' law
would have provided more resources for Medicare provider outreach and
education. I hope to find other avenues to provide these resources.
From the testimony of the witnesses, and from past hearings of the
Committee, I think there are a lot of straightforward and helpful steps
to improve the Medicare audit rules and procedures. I am committed to
working with the committee, the administration and the many
stakeholders to improve how audits are performed.
______
Prepared Statement of Sandy Coston, CEO and President,
Diversified Service Options, Inc.
Chairman Hatch, Ranking Member Wyden, and distinguished members of
the Committee, it is an honor to testify before you today. I am Sandy
Coston, CEO and President of Diversified Service Options, Inc.
(Diversified) and its wholly owned subsidiaries, First Coast Service
Options, Inc. (First Coast) and Novitas Solutions, Inc. (Novitas). With
over 20 years of experience in the Medicare program, I am very grateful
for the opportunity to share my thoughts on how to improve the Medicare
appeals process.
First Coast and Novitas contract with the Centers for Medicare and
Medicaid Services (CMS) to provide quality Medicare administrative
services throughout the United States to approximately five hundred
thousand health care providers who care for more than eleven million
Medicare beneficiaries. The services we provide include claims
processing, customer service, appeals adjudication, education and
outreach activities, and functions that help ensure the integrity of
Medicare Program payments.
We are proud to serve as the Part A and Part B Medicare
Administrative Contractor (MAC) for Florida, Puerto Rico, and U.S.
Virgin Islands (Jurisdiction N), Delaware, District of Columbia,
Maryland, New Jersey, and Pennsylvania (Jurisdiction L), and Arkansas,
Colorado, Louisiana, Mississippi, New Mexico, Oklahoma and Texas
(Jurisdiction H). Collectively, these three contracts represent
approximately 32% of the national Part A and Part B Medicare workload.
We take our responsibility of protecting the Medicare Trust Fund
seriously and we have approximately 3,400 staff located in Florida,
Georgia, Maryland, Pennsylvania, Texas, and Wisconsin that carry out
these responsibilities on a daily basis. Our headquarters are in
Florida and Pennsylvania and we have proudly served the Medicare
Program since its inception.
We applaud the Committee for holding this hearing to highlight the
need to improve appeals processes. We also appreciate the work of
Senator Hatch and Senator Wyden for their work focusing attention on
making improvements with input from Medicare contractors such as ours
and other key stakeholders who care about the Medicare program and are
committed to making improvements.
The focus of my testimony today will be on ways to streamline the
appeals process and lower the appeals backlog; specifically, our role
in the appeals process, a description of what we believe generated
significant increases in appeals resulting in the current backlogs,
efforts that currently take place to alleviate these backlogs, and
provide our expertise on additional recommendations to improve the
process and further reduce additional appeals backlogs.
current appeals process
Medicare claims are submitted to a MAC for processing.
Approximately 95% of Medicare Part A and Part B claims are processed by
CMS claims systems without human intervention. Should the claim
determination result in a decision that differs from the expectation of
the physician, provider, supplier or beneficiary, they have a right to
appeal the decision. Currently there are five different levels of
appeal.
As referenced in the attached Exhibit I--Claims Appeal Process, the
MAC handles the first level of appeal, also referred to as a
redetermination. When submitted within the 120 day time limit, the MAC
reviews both its initial claim determination as well as any and all
information submitted on or with the initial claim and/or the appeal
request. This may include information regarding the claim provided to
the MAC for the first time. The MAC then either modifies or affirms its
original decision and effectuates any changes.
It is important to understand that appeals are not all related to
whether or not a particular service was or was not medically necessary
(i.e. clinical reviews). In fact a significant number of submissions
for appeals are non-clinical in nature (i.e. approximately 40%). In
addition, there are a number of other factors that complicate the
provider's decision to request an appeal as opposed to taking some
other type of action. For example, rather than requesting an appeal, a
provider might simply have made a clerical error and in fact needs to
request a clerical error claim reopening. In this case, the provider
would indicate what was missed or keyed wrong for example, and request
that the MAC correct the claim and reprocess. Unfortunately, providers
do not always understand when this can be done, nor do they make a
clear distinction as to what they are asking the MAC to do (i.e. appeal
or reopening) leaving it up to the MAC to review each request and
determine the most appropriate course of action to take that will
address the provider's request.
Another common problem is that some providers deal with multiple
MACs. This can lead to confusion as to which MAC should be sent the
appeal for the claim at hand. MACs also must upon appeal receipt, sort
out those appeals that belong to other MACs and reroute them for the
providers.
There are also issues that surface in appeal requests that are not
``appealable issues.'' These types of requests are handled as inquiries
and responded to with letters of explanation rather than as an appeal.
These include things such as claims that never processed initially but
may have been rejected for not having contained all the needed
information.
Finally, there are a number of claims actions that can occur
resulting in an overpayment recovery wherein the claim was initially
paid then determined to have been paid in error [e.g. probe reviews,
Zone Program Integrity Contractor (ZPIC) investigations and Office of
Inspector General special study results]. A letter is sent to the
provider indicating the need to repay the Medicare Program; this action
is eligible to be appealed. When MACs receive these types of appeals,
there is an accompanying action that must be taken to cease overpayment
recovery efforts within six days of receiving notification of a valid
request for appeal.
These sorting type issues are generally limited to the MAC level of
appeal as subsequent levels of appeal require that the first level of
appeal have been completed. As a result of all these activities
performed by the MAC, over the past three years we have received
approximately 4 million appeal requests across our three MAC contracts.
Of these, approximately 60% were completed and closed as valid appeals
while the remaining 40% fell into one of several sorting categories.
The remaining levels of appeal are performed by entities separate
and distinct from the MAC. The second level of appeal, termed a
reconsideration, is performed by a Qualified Independent Contractor
(QIC) with whom CMS contracts specifically to perform this level of
appeal. Their work is limited to those claims for which a MAC
redetermination has been completed and the provider remains in
disagreement with the outcome. This level of appeal again involves a
complete case file review of all the MAC appeal materials as well as
any new materials submitted by the appellant. The findings are issued
in writing to the appellant and sent back to the MAC to effectuate any
changes in claims payment outlined in the appeal decision.
The third level of appeal is that conducted by the Office of
Medicare Hearings and Appeals (OMHA) and is termed an Administrative
Law Judge (ALJ) Hearing and results in a complete de novo review of the
entire appeal case, which can also include appellant testimony, and the
issuance of an ALJ decision. The decision issued is again returned to
the MAC to effectuate any directed changes in claims payment.
Should the appellant disagree with the ALJ decision, the fourth
level of appeal is submitted to the Medicare Appeals Council. The
Health and Human Services Departmental Appeals Board (DAB) administers
this review. As with the other levels, should the DAB overturn the
decision in whole or in part, the MAC effectuates the decision as
directed. The final level of review is that of the Judicial Review in
the U.S. District Court.
genesis of appeals backlog
Over the last several years, the number of entities that are
involved in the evaluation of claims both pre-claim payment and post-
claim payment has increased dramatically, as has the number of claims
being scrutinized. In addition to the MAC, these entities include the
ZPIC, the Comprehensive Error Rate Testing Program Contractor (CERT),
and the Medicare Recovery Auditors (formerly Recovery Audit
Contractors) (RA). Each of these entities approaches the review of
claims from a slightly different perspective. The primary goal of ZPICs
is to investigate instances of suspected fraud, waste, and abuse. ZPICs
develop investigations early, and in a timely manner, take immediate
action to ensure that Medicare Trust Fund monies are not
inappropriately paid. They also identify any improper payments that are
to be recouped by the MAC. CMS calculates the Medicare Fee-for-Service
(FFS) improper payment rate through the CERT program. Each year, the
CERT contractor evaluates a statistically valid random sample of claims
to determine if they were paid properly under Medicare coverage,
coding, and billing rules. Finally the RA's mission is to identify and
correct Medicare improper payments through the efficient detection and
collection of overpayments made on claims of health care services
provided to Medicare beneficiaries, and the identification of
underpayments to providers so that CMS can implement actions that will
prevent future improper payments.
The most significant contributor to changes in the volume of
appeals has been the RA. As demonstrated in Exhibit II--First Coast
Medicare Part A Appeals Volumes, and using First Coast Part A claims as
the example, the overall percent of appeals driven by RA decisions
jumped from 7% in 2011 to 63% in 2013. Similarly, the overall volume of
appeals went from approximately 23 thousand to over 66 thousand for the
same time periods. Further, this dramatic increase in appeals was also
compounded by the type of claims being reviewed. Predominately the
increase involved inpatient claims which are more time consuming to
review than the majority of prior appeals received by a MAC, and also
require a higher level clinical skill set. Therefore, the resources
available to handle these appeals at all levels were impacted by both
volume and an increase in needed time to conduct a single appeal.
Finally, the high dollar value of these inpatient claims being appealed
made it more financially important and more likely that providers would
pursue all appeal levels available.
current efforts to alleviate backlogs
To date, a number of actions have been taken to relieve the backlog
that now lies primarily at the 3rd (ALJ) level which includes:
Clarification and Standardization of Documentation Inpatient
Admission Rules: CMS published the ``Two Midnight Rule'' in
August of 2013. This rule clarified CMS's longstanding policy
on how Medicare contractors review inpatient hospital claims
for payment purposes. In addition to working with MACs to
ensure consistent understanding of the rules, CMS also
facilitated provider education in the form of probe and educate
claim reviews.
Limited RA inpatient claims review: Along with the rule above, the
Protection Access to Medicare Act of 2014 signed into law on
April 1, 2014, prohibited RAs from conducting any inpatient
hospital status reviews on claims with dates of admission from
October 1, 2013 to March 31, 2015 to give the probe and educate
process time to be completed.
Limited RA documentation requests: CMS reduced the minimum medical
record requests required of RAs to reduce the administrative
burdens on hospitals and other providers, as well as limited
the percentage of selected claims to 75% for any one claim
type. In addition, CMS carefully reviews each new claim review
initiative developed by RAs.
Hospital Appeals Settlement Project: CMS initiated a project in
January of 2015 to allow all eligible hospitals to enter into
an administrative agreement in exchange for withdrawing their
pending inpatient status appeals. This agreement results in a
timely partial payment of 68% of the net allowed amount.
OMHA Settlement Conference Facilitation Pilot: This pilot is
currently limited to Part B appeals for which an ALJ hearing
was filed in calendar year 2013 and those not yet assigned to
an ALJ. Following CMS and the Appellant reaching agreement, the
MAC calculates the settlement amount and issues payment
according to the terms of the settlement. As with the process
outlined above, the provider relinquishes any right to further
appeals on the claims involved.
recommendations to streamline the appeals process and reduce backlogs
The following is an overview of several recommendations that may
effectively reduce the backlog of appeals at the ALJ level and or keep
a backlog from reoccurring as well as a recommendation to improve the
appeals process while gaining efficiencies.
Remand cases to the prior level of appeal when the ALJ finds good
cause for the submission of new evidence: In cases where new
evidence is submitted at the ALJ level, remanding these cases
back to the prior level for handling would result in a
reduction in the ALJ backlog, as well as quicker resolution for
the provider. Further, handling these cases at an earlier level
of appeal not only preserves the ALJ level of appeal for the
provider when needed, but reduces the expense of having the MAC
and the QIC appeals staff prepare for and participate in cases
that may indeed be able to be resolved based on the new
evidence. Additionally, for reconsiderations that are
favorable, there is significant cost avoided by the ALJ as well
as the provider and likely the provider would receive payment
sooner.
Establish a per-claim filing fee for appeals brought by providers
and suppliers which would be refunded on fully favorable
decisions: This would discourage the filing of non-meritorious
appeals thereby reducing the backlog and provide a level of
funding for reinvestment in program hiring and administration.
The 1st level of appeal by the MAC could easily be modified to
focus on the needed triaging of cases and the processing of
cases which do not have a medical necessity component. This
would modify the MAC's role from that of performing all of the
1st level appeals to that of triaging appeal requests. This
triage would support the continued need to sort out the cases
properly addressed as reopenings and/or inquiries, allow
rerouting of misdirected appeals to the correct contractor, and
timely identification of those valid appeals requiring a hold
on the overpayment collection process. Additionally, by
limiting the MAC appeal case work to those non-clinical cases
would allow the MAC to focus its dollars on the cases most
likely to be reversed at this level. The QIC would then be
positioned to handle the appeals involving a more complex level
of clinical decision making. Most importantly this would
eliminate a back and forth of cases going into the QIC and
having to be rerouted to the MAC, and the QIC having to hold
its appeal receipt waiting for the MAC to prepare the documents
it needs to conduct its reconsideration or 2nd level of appeal.
Further and with all contractors linking the appeals process
through the Medicare Appeals System (MAS), a system that CMS
has already implemented, the MACs can initiate the file on the
appeals and electronically initiate a case at the QIC level
without having to transfer a file.
The operational savings associated with the elimination of the 1st
level of clinical appeal could then be redirected into provider
education on the most common claim denial findings. These topics would
include claims submission accuracy and common documentation pitfalls.
As evidenced by common review findings Exhibit III--Common CERT
Errors, providers frequently miss a key element of required
documentation not because the patient didn't need the service being
billed but because they did not add the few required elements reviewers
are required to ensure are evident in the medical records. This error
results in the finding of insufficient documentation. Closely related
are the issues of medical necessity where the documentation lacks
sufficient information to conclude that the patient needed the service
billed. With additional funding, the MAC could deliver a more intensive
level of training around these issues to keep these types of claim
denials from occurring in the first place. Finally, by eliminating a
level of appeal, the provider has fewer contractors to deal with and is
able to reach the ALJ, Medicare Appeals Council and Federal District
Court sooner should they chose those levels of appeal.
In closing, we appreciate the leadership of this Committee in
reviewing ways to improve the appeals process and reduce backlogs. We
remain supportive of the program and look forward to being part of the
solution to these complex challenges. I thank you for the opportunity
to testify before this Committee and I look forward to answering your
questions.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
Questions Submitted for the Record to Sandy Coston
Questions Submitted by Hon. Orrin G. Hatch
Question. Providers report that the use of different appeals
numbers at various levels of appeal is confusing and hampers efficient
tracking. Might you consider implementing a uniform docketing system
across various levels of appeal?
Answer. Currently, there is not a single system that facilitates
the use of a standardized case numbering protocol across all levels of
appeal. The Medicare Appeals System (MAS) is currently used by all
Qualified Independent Contractors (QIC) performing second level
reconsideration appeals and CMS is in the process of transitioning all
Medicare Administrative Contractors (MACs) to the same system (Part A
currently transitioning with Part B planned in the near future). The
MAS system allows for an indication of cases promoted to the
Administrative Law Judge (ALJ) third level of appeal under the QIC MAS
number so the two could be linked. The same will eventually be true for
the MACs once all MACs have been transitioned to MAS. While the MAC,
QIC and ALJ use different numbering systems, the MAS allows for a
linkage of these three numbers. Technically, this linking of at least
the first three levels of appeal may provide the elements needed to
construct a view into the case at the first three levels.
Question. Ms. Coston, are there areas where additional authority
would help you address appeals issues prior to going before an ALJ? Are
there ways to work through disputes (perhaps even over technical
issues) and avoid the appeals system altogether?
Answer. Additional authority that would help us address appeals
issues includes requiring all documentation be submitted with the first
level of appeal prior to being able to appeal to the next level.
If this authority cannot be granted, then as we discussed, giving
the QICs and the ALJs the authority to remand an appeal back to the
prior level would be helpful to getting the documentation needed from
the onset for all cases. Additionally, the first level of appeal could
include an outreach (development for additional information) to the
provider when it is clear that documentation is missing (example, a
diagnostic test missing a physician order) although this would have a
cost impact to the MAC's processes.
With regard to working through disputes to avoid the appeal system
altogether, there are ways to assist the provider in getting their
claims paid through individual outreach and education. It is not
unusual for MAC staff to walk a provider through a processing issue
thatinvolves a number of claims. However, the key to success is for the
provider to sustain the education as this individual outreach and
education can be very costly.
Question. What thoughts do you have on the President's budget
proposals and whether they will make the differences purported, or do
we need to continue to also explore other legislative alternatives?
Answer. As this primarily affects ALJ resources, Chief
Administrative Law Judge Griswold is in a better position to comment.
Question. Finally, as we continue to develop our statutory response
to these issues, what would be the one thing that you would change to
improve the flow of the appeals process?
Answer. As noted in our response to Question 2 above, we would
recommend requiring all documentation be submitted with the first level
of appeal prior to being able to appeal to the next level.
______
Questions Submitted by Hon. Chuck Grassley
Question. For the last couple of years, there has been constant
controversy over the battle between Medicare providers, especially
hospitals, and recovery audit contractors (RACs). When an appeal is
heard, someone wins and someone losses, but there's no public
scorekeeping of wins and losses. We believe that open accounting could
cut down on frivolous findings by RACs, frivolous appeals by providers,
and lackadaisical rulings from the reviewers.
There is a value in transparency when government is engaged in the
people's business. In this case, the appeals process is in desperate
need of transparency. Regularly, I will have providers tell me they win
90% of their appeals. Then minutes later, I will get visits from
auditors who tell me they are winning 90% of their appeals. Clearly,
those numbers do not add up.
The appeals process would benefit from an open and transparent
accounting of appeals outcomes. If we are concerned about frivolous
findings against providers, frivolous appeals of auditor findings, and
reviewers not devoting adequate consideration to the policy issues,
transparency would shine a light on all parties to the process.
Is there any reason you can think of that we should NOT publish, in
the aggregate, the appeals outcomes, essentially wins and losses by
provider and auditor at your level of the appeal process?
Answer. We are a proponent of transparency and distribution of
information. However, it should be recognized that numbers and win/loss
ratios can be deceiving. The system is much more complicated than can
be represented by aggregate numbers on a portion of claims that have
been appealed. For example, a provider may claim to have a 90% win rate
but then again, they may have only appealed a small percentage of
claims which were denied. Most providers are very selective about what
they choose to take to the next level of appeal. Similarly, an auditor
may claim a 90% win rate for the universe of cases that actually get
appealed to the next level, but this does not mean that the provider
referenced above appealed all their cases to the next level. To be
accurate, one would have to take the universe of the denied claims, as
the denominator and the universe of the ``won'' claims on appeal to
arrive at the correct ratio.
Further, there is an enormous variation in the different kinds of
audits and auditors (e.g., MACs, QICs, Recovery Auditor Contractor
(RAC), etc.) as to why they are reviewing a particular service. For
example, a MAC might be reviewing a claim that was selected based on
the aberrant billing pattern of the individual provider, while the RAC
may being looking at a particular service across a larger universe of
providers and is focused on verifying medical necessity. While we would
agree therefore that publication is good, it would require careful
consideration of the appropriate data elements and what the data means
before publication.
Question. Is there any reason you can think of that we should NOT
publish, in the aggregate, the appeals outcomes by the specific ALJs so
we can look at them comparatively?
Answer. One would have to be very clear about the case mix each ALJ
reviewed and the reasons for the original denial that drove the appeal.
If one could outline all factors that cause appeal outcome variances,
then publishing would be appropriate. This would however be very
complex.
One also would have to consider that all upheld unfavorable
decisions at one level are not necessarily appealed to the next level.
The best representation of activity would be to look at one type of
audit (e.g., RAC inpatient status reviews) noting the initial volume of
claims selected for audit, the initial denial rate, then noting the
rate of reversal for those same claims as they move through the levels
of appeal.
______
Question Submitted by Hon. John Thune
Question. Ms. Coston, in your written testimony, you stated that
approximately 40 percent of appeals are non-clinical in nature, and
that providers often appeal to a Medicare Administrative Contractor
(MAC) without making clear what action the provider would like to take.
Why is it that after a decision is made by a Recovery Auditor (RA) that
providers are still not sure whether they made a clerical error? Do RAs
need to do more to educate providers about its determination?
Answer. The 40 percent of appeal that are non-clinical in nature
are not necessarily those driven by the RA. Most are related to claims
submission issues where the decision to deny was a result of the MACs
prepayment safeguards. That said, the MACs could develop and carry out
additional educational efforts to assist providers in complex claim
submission.
______
Questions Submitted by Hon. Richard Burr
Question. What opportunities exist to improve the consistency and
predictability of the audit and appeals processes from both a provider
and an auditor's perspective while striking the right balance to ensure
Medicare program integrity?
Answer. From a provider's perspective, there needs to be clear
guidelines of coverage and examples associated with those guidelines as
to what adequate documentation looks like. From the auditor's
perspective, there needs to be provider documentation that is adequate
to allow a determination to be made as to whether or not the patient
meets the coverage guidelines.
The educational focus needs to be on giving providers information
about what services Medicare covers and under what circumstances those
services are considered to be payable. This would include augmenting
existing education and developing educational vehicles that engage the
provider who is documenting the record vs. the provider's ancillary
staff. Again, additional education should be focused on coverage
criteria vs. claim coding and submission.
Question. In 2013, Medicare's improper payment rate was above 10
percent. In your testimony you note that the most significant
contributor to changes in the volume of appeals has been the Recovery
Auditors, and the overall percent of appeals driven by Recovery Auditor
decisions increased from 7 percent to 63 percent in 2013. What are some
of the quality checks currently in place to ensure that Recovery
Auditors do not place undue burden on providers, and that their audits
are efficient and error free?
Answer. With respect to the current quality check in place to
ensure that the Recovery Auditors do not place undue burden on
providers, the Recovery Audit contractors and CMS would be best
positioned to explain the safeguards in place.
However, CMS has implemented several actions to limit the burden on
any one provider in terms of the number of audits that are done at any
given time. Additionally, CMS reviews each audit subject prior to its
initiation.
Question. What efficiencies and cost-savings could be gained by no
longer having MACs as the first level of appeal?
Answer. We recommended that the first level of appeal involving
medical necessity clinical review be moved to the QIC. The result would
eliminate the cost of clinical review activities at the first level of
appeal and provide the appellant with quicker access to a decision
maker with provider-like credentials, i.e., a physician, prior to any
decision to uphold the denial.
Question. Would provider education and outreach help to address the
concern that providers may not always understand the distinction
between appealing versus reprocessing a claim?
Answer. Definitely. This education could be targeted to include the
provider's ancillary staff as they can easily identify data entry
errors, claim coding issues and submission errors where the addition or
correction of information can be conducted via the reopening process
and does not need to go through the appeal process.
______
Questions Submitted by Hon. Ron Wyden
appeals processed and resolved at each level
Question. Providers, suppliers, and beneficiaries have the ability
to appeal audit decisions through an administrative appeals process.
The levels of administrative review and adjudication include the
redetermination--as performed by the Medicare Administrative
Contractor, the reconsideration--as performed by the Qualified
Independent Contractor, the hearing conducted by an Administrative Law
Judge in the Office of Medicare Hearings and Appeals (OMHA), and the
review conducted by the Medicare Appeals Council, Department Appeals
Board. In recent years, there has been a notable influx in the number
of appeals requested. As a result, certain levels of the appeal process
have become substantially backlogged.
How many claims are appealed to your level of review annually? How
does this number differ from historical annual appeal requests?
Answer. Following is data for First Coast for Jurisdiction 9 (now
Jurisdiction N):
Part A
----------------------------------------------------------------------------------------------------------------
Year 2010 2011 2012 2013 2014
----------------------------------------------------------------------------------------------------------------
Part A Appeals Volume......................................... 18,576 22,714 42,641 63,463 24,614
----------------------------------------------------------------------------------------------------------------
RAC A within the above........................................ 738 1,615 16,851 41,436 7,329
----------------------------------------------------------------------------------------------------------------
Part B
----------------------------------------------------------------------------------------------------------------
Year 2010 2011 2012 2013 2014
----------------------------------------------------------------------------------------------------------------
Part B Appeals Volume......................................... 295,081 276,784 316,398 317,124 335,217
----------------------------------------------------------------------------------------------------------------
RAC B within the above........................................ 0 841 4,022 2,205 2,202
----------------------------------------------------------------------------------------------------------------
Following is data for Novitas for Jurisdiction H (note that 2012 is
a partial year):
Part A
----------------------------------------------------------------------------------------------------------------
Year 2010 2011 2012 2013 2014
----------------------------------------------------------------------------------------------------------------
Part A Appeals Volume......................................... NA NA 11,597 89,664 72,341
----------------------------------------------------------------------------------------------------------------
RAC A within the above........................................ NA NA 4,458 46,787 43,000
----------------------------------------------------------------------------------------------------------------
Part B
----------------------------------------------------------------------------------------------------------------
Year 2010 2011 2012 2013 2014
----------------------------------------------------------------------------------------------------------------
Part B Appeals Volume......................................... NA NA 18,351 287,664 225,064
----------------------------------------------------------------------------------------------------------------
RAC B within the above........................................ NA NA 2,377 10,559 2,836
----------------------------------------------------------------------------------------------------------------
Following is data for Novitas for Jurisdiction L:
Part A
----------------------------------------------------------------------------------------------------------------
Year 2010 2011 2012 2013 2014
----------------------------------------------------------------------------------------------------------------
Part A Appeals Volume......................................... 19,409 30,656 50,615 64,190 46,079
----------------------------------------------------------------------------------------------------------------
RAC A within the above........................................ 110 5,928 20,098 25,191 15,196
----------------------------------------------------------------------------------------------------------------
Part B
----------------------------------------------------------------------------------------------------------------
Year 2010 2011 2012 2013 2014
----------------------------------------------------------------------------------------------------------------
Part B Appeals Volume......................................... 182,433 181,788 198,360 200,214 227,576
----------------------------------------------------------------------------------------------------------------
RAC B within the above........................................ 101 4,669 3,669 1,135 4,106
----------------------------------------------------------------------------------------------------------------
Question. Of the total number of claims appealed to your level, how
many receive an unfavorable decision? If possible, provide this
information in aggregate and broken down by appeal claim type (e.g.,
Part A).
Answer. Following is data for First Coast for Jurisdiction N:
Part A
----------------------------------------------------------------------------------------------------------------
05/2014-04/2015
All Processed -----------------------------------------------
Total Unfavorable Percent
----------------------------------------------------------------------------------------------------------------
Part A.......................................................... 18,619 8,136 43.70%
----------------------------------------------------------------------------------------------------------------
RAC............................................................. RAC is also included in the All Processed,
above
----------------------------------------------------------------------------------------------------------------
Part A RAC...................................................... 2,574 1,225 47.59%
----------------------------------------------------------------------------------------------------------------
Part B
----------------------------------------------------------------------------------------------------------------
05/2014-04/2015
All Processed -----------------------------------------------
Total Unfavorable Percent
----------------------------------------------------------------------------------------------------------------
Part B.......................................................... 332,897 158,393 47.58%
----------------------------------------------------------------------------------------------------------------
RAC............................................................. RAC is also included in the All Processed,
above
----------------------------------------------------------------------------------------------------------------
Part B RAC...................................................... 1,538 1,014 65.93%
----------------------------------------------------------------------------------------------------------------
Following is data for Novitas for Jurisdiction H:
Part A
----------------------------------------------------------------------------------------------------------------
2014
All Processed -----------------------------------------------
Total Unfavorable Percent
----------------------------------------------------------------------------------------------------------------
Part A.......................................................... 71,386 52,596 74%
----------------------------------------------------------------------------------------------------------------
RAC............................................................. RAC is also included in the All Processed,
above
----------------------------------------------------------------------------------------------------------------
Part A RAC...................................................... 42,887 39,090 91%
----------------------------------------------------------------------------------------------------------------
Part B
----------------------------------------------------------------------------------------------------------------
2014
All Processed -----------------------------------------------
Total Unfavorable Percent
----------------------------------------------------------------------------------------------------------------
Part B.......................................................... 197,857 107,174 54%
----------------------------------------------------------------------------------------------------------------
RAC............................................................. RAC is also included in the All Processed,
above
----------------------------------------------------------------------------------------------------------------
Part B RAC...................................................... 2,017 564 28%
----------------------------------------------------------------------------------------------------------------
Following is data for Novitas for Jurisdiction L:
Part A
----------------------------------------------------------------------------------------------------------------
2014
All Processed -----------------------------------------------
Total Unfavorable Percent
----------------------------------------------------------------------------------------------------------------
Part A.......................................................... 45,768 24,844 54%
----------------------------------------------------------------------------------------------------------------
RAC............................................................. RAC is also included in the All Processed,
above
----------------------------------------------------------------------------------------------------------------
Part A RAC...................................................... 14,350 11,058 77%
----------------------------------------------------------------------------------------------------------------
Part B
----------------------------------------------------------------------------------------------------------------
2014
All Processed -----------------------------------------------
Total Unfavorable Percent
----------------------------------------------------------------------------------------------------------------
Part B.......................................................... 173,100 89,913 52%
----------------------------------------------------------------------------------------------------------------
RAC............................................................. RAC is also included in the All Processed,
above
----------------------------------------------------------------------------------------------------------------
Part B RAC...................................................... 2,982 881 30%
----------------------------------------------------------------------------------------------------------------
Question. Of the total number of appeals that receive an
unfavorable decision at your level, how many of those are subject to
additional review at the request of the appellant (i.e., are appealed
to the next level)? If you note any trends in cases that proceed for
additional review, please break out the data accordingly.
Answer. First Coast is only able to state the number of appeals
that went to the next level of appeal (2nd Level QIC) based on their
request for our case file:
Part A
------------------------------------------------------------------------
QIC Request Received 2012 2013 2014
------------------------------------------------------------------------
Total.................................. 12,912 44,680 10,873
------------------------------------------------------------------------
Part B
------------------------------------------------------------------------
QIC Request Received 2012 2013 2014
------------------------------------------------------------------------
Total.................................. 31,148 45,894 44,727
------------------------------------------------------------------------
Novitas is only able to state the number of appeals that went to
the next level of appeal (2nd Level QIC) based on their request for our
case file for Jurisdiction H (note that 2012 is a partial year):
Part A
------------------------------------------------------------------------
QIC Request Received 2012 2013 2014
------------------------------------------------------------------------
Total.................................. 5,029 42,221 52,521
------------------------------------------------------------------------
Part B
------------------------------------------------------------------------
QIC Request Received 2012 2013 2014
------------------------------------------------------------------------
Total.................................. 4,220 31,291 25,743
------------------------------------------------------------------------
Novitas is only able to state the number of appeals that went to
the next level of appeal (2nd Level QIC) based on their request for our
case file for Jurisdiction L:
Part A
------------------------------------------------------------------------
QIC Request Received 2012 2013 2014
------------------------------------------------------------------------
Total.................................. 18,679 32,408 19,406
------------------------------------------------------------------------
Part B
------------------------------------------------------------------------
QIC Request Received 2012 2013 2014
------------------------------------------------------------------------
Total.................................. 17,132 17,245 17,381
------------------------------------------------------------------------
the use of medical expertise to adjudicate medically complex cases
Question. Anecdotally, I have been informed that cases involving
``medical necessity,'' or those cases which require significant
clinical review and input to effectuate, are most frequently subject to
higher level appeal requests. I also understand that such cases are
timely to review, and at the lower levels of appeal are reviewed by a
clinician, such as a nurse and/or physician.
Can you discuss how such cases are currently processed at your
level of review?
Answer. At the first level of review, cases are sorted upon initial
receipt. Once those that can be handled as reopenings are identified,
those that remain are sorted based on the basis of the initial claim
denial. Any case that involved a clinical review prior to payment goes
to a clinician to review at the appeal level. The rest are primarily
technical in nature (e.g., modifiers, number billed, procedure and
diagnosis coding) and generally involve cases that will be handled as
inquiries or dismissed as not being valid appeals.
MACs have nurses who review the cases and apply guidelines approved
by the Office of the Contractor Medical Director. These cases are not,
however, given a level of physician review unless the nurse is dealing
with a very unusual case (mostly associated with new technology) where
we have an established process for referring cases for a higher level
of review.
Question. Do you think there would be a benefit in requiring
medical expertise to be uniformly incorporated at all levels of the
administrative appeals process? Why or why not?
Answer. Based upon our recommendation for the MAC to forward
medical necessity cases to the QIC, effectively eliminating the first
level of appeal, there would be an inherent uniformity of medical
expertise.
However, if the recommendation to eliminate the first level of
appeal for medical necessity cases is not adopted, we do not
necessarily think there would be a benefit in requiring medical
expertise to be uniformly incorporated at all levels. Once a case is at
the second level of review which is performed by the QIC, any case that
the nurse determines cannot be overturned and paid will be secondarily
reviewed by a physician before the denial of the case stands. This
second level of review is more costly than the first level of review.
Additionally, there tend to be fewer providers who ``appeal
everything'' at the QIC level. These cases tend to be more likely to
need clinical review. It would be much more efficient to have the MAC
focus on logging cases and sorting those that can be handled as
reopenings, leaving the clinical review to be focused at the QIC level.
Currently, MACs and QICs have the option of participating at the
ALJ level of appeal. We believe this participation provides medical
expertise to be uniformly incorporated through the third level of
appeal.
Question. Do you have any other suggestions to improve the Medicare
appeals process for cases involving medical necessity?
Answer. Establish consequences for not submitting all the
documentation the first time the case is appealed. The case history
often reflects that the appellant did not provide the needed
documentation (outlined in published policy) until the QIC or ALJ
levels of review. Availability of this documentation increases the
likelihood that a complete medical necessity review will be conducted
at the first level of appeal.
improving efficiency through electronic case files and
``interoperability''
Question. During the hearing, each witness reiterated that the
adoption of electronic case files across all levels of review could
significantly improve the efficiency of the Medicare appeals process.
Additionally, Mr. Naughton discussed the potential benefits of having
interconnectivity between the existing and future electronic systems,
so that: (i) appellants could more easily ascertain their current
status in the administrative appeals process, and (ii) reviewing
entities were assured that the case file was transmitted in its
entirety.
Can you share how documents are electronically processed at your
level, including the interconnectivity of such systems?
Answer. When cases are received (whether by secure Internet portal,
traditional mail or fax), it generates an imaged document which is
housed in our image repository. Most MACs have developed some type of
home grown system to facilitate the processing of these appeal cases.
When the appellant request the 2nd level of appeal of the QIC, the QIC
sends a faxed case file request. The fax is scanned and also becomes an
imaged document. Once this request is received, a case file is created
that links our original case file (the documents and decisions
associated with the 1st level appeal) with the request and returns the
package electronically to the QIC via a secured connection. The only
connectivity we have with the QIC is this connection to send case files
to them. See also response to the question below.
Question. How could electronic case files be more thoroughly
integrated across all levels of review?
Answer. If all parties were using the MAS (currently in place at
all QICs with CMS rolling out use to all MACs for Part A case work with
plans to eventually include Part B), the MAC could create the initial
case file once it determines the submission to be a valid appeal. All
of the documents would then be uploaded into MAS for immediate access
by the QIC. Additionally, if the ALJs were also linked into this system
or had a method of moving their case file requests and decisions to
MAS, the first 3 levels of appeal (the overwhelming majority of cases)
could be accessed by all. This would also tremendously increase the
level of analysis that could be done on case trends, reversal trends
and the reasons for those reversals to feed the quality improvement
processes at each contractor.
Question. Please expand on the expected benefits to the appeals
process should such suggestions be adopted.
Answer. As stated above, virtually all of the time spent
requesting, preparing and sending case files across contractors would
be eliminated. There would be transparency of decision making across
the contractors to facilitate quality initiatives around better and
more consistent decision making. Ultimately, the time to conduct the
appeal would be reduced for the provider and beneficiary by eliminating
the portion of time spent routing case files and decisions back and
forth.
______
Questions Submitted by Hon. Sherrod Brown
redetermination and reconsideration
Question. One of the ways the Department of Health and Human
Services (HHS) helps to protect the Medicare Trust Fund is by
conducting audits to ensure the appropriateness of the services
provided. Providers and beneficiaries have the ability to appeal audit
decisions through an administrative appeals process.
Medicare Administrative Contractors (MACs) are charged with
auditing claims for appropriateness, processing claims through the
system to provide payment, and educating providers about Medicare
rules. MACs generally conduct their reviews prior to payment, and are
paid through traditional contracts. Redetermination reviews, performed
by the MACs, are the first level of review under the Medicare audit and
appeals process. They are conducted by clinicians for medical necessity
purposes and non-clinicians for other types of appeals.
Ms. Coston--what is the annual budget (or how much does HHS spend)
per year on processing redeterminations?
Answer. We do not have the HHS numbers. However, our annual appeals
budget is approximately $28.5 million to process reopenings,
redeterminations and other appeals related work.
Question. Reconsideration reviews are the second level of review,
performed by Qualified Independent Contractor (QICs)--generally a nurse
or a physician--operating under the oversight of CMS.
Ms. Coston--do you believe that current policies and procedures at
the MAC and QIC levels provide sufficient support to beneficiaries, who
are often left to pursue these claims on their own?
Answer. Often times beneficiaries are confused by the appeals
process due to the complexity of the Medicare program. The 1-800
Medicare line is their source of receiving direct assistance. MAC
contractors are separate and apart from the 1-800 Medicare contractor.
We do believe that our current policies and procedures as a MAC are
sufficient to support beneficiaries. The MACs are charged with
obtaining from the beneficiaries' provider any needed medical record
documentation that may be missing in order to conduct a beneficiary
submitted appeal. We are unable to comment on the QIC's policies and
procedures.
Question. What more can be done to ensure beneficiaries are aware
of their rights and understand the appeals process and the information
necessary to make a successful claim? What more can be done to make
sure that the Redetermination and Reconsideration levels of appeal are
more meaningful for beneficiaries?
Answer. The 1-800 Medicare contractor has the direct relationship
with the beneficiaries for outreach and education. This work has never
been part of the MAC contracts. We are completely familiar with all of
the efforts of the 1-800 Medicare contractor, so this question would be
better answered by them. Additionally, most beneficiaries are dependent
upon their physician to tell them what Medicare will and will not
cover.
Question. Ms. Coston's written testimony suggests that the MACs'
role should be modified to ``triaging'' cases and appeals and limiting
its processing to non-clinical cases.
Ms. Coston--would it be possible to go further and have one
contractor handle both the triaging function and the processing of
cases under one roof, effectively merging those functions into one
entity and dispensing with one of the two lower levels of review? If
yes, do you have suggestions for how that could work? If no, why not?
Answer. Currently the MACs are responsible for triaging and the
processing of the first level of appeal. As we recommended, we do
believe the first level of appeal can be eliminated for medical
necessity cases by routing these cases directly to the QIC.
recovery audit contractors (racs)
Question. RACs are another tool CMS uses to audit potentially
improper payments. The RAC system was permanently established by
Congress in 2010, following a 3-year demonstration. RACs are paid on a
contingency-fee basis based on their identification of improper
payments.
In 2012, RACs returned almost $2 billion to Medicare. Over half of
the funds appeals received by the Office of Medicare Hearings and
Appeals (OMHA) are RAC-related. Today, OMHA is funded only by
discretionary appropriations.
It seems as though the enormous spike in appeals that has
overwhelmed the system is mainly attributable to hospital appeals of
RAC determinations.
Ms. Coston--would you support a separate appeals system for those
claims? Do you have suggestions for how that could work?
Answer. We would not suggest a separate appeals system for RA claim
audits. The RAs are still looking at claims that were processed by the
MACs. Each MAC knows how and why, the rules followed and such
particular to that claim that can be very different from MAC to MAC
depending again on the system editing and local coverage policy in
effect for that jurisdiction.
making the system more friendly for beneficiaries
Question. Despite the fact that the Medicare appeals system was
created with beneficiaries in mind, we know that it is providers who
file the vast majority of appeals. In 2010, for example, Medicare
beneficiaries filed just 11% of the appeals heard by ALJs.
Today, beneficiary-initiated appeals continue to make up a
proportionally small percentage of the total number of appeals, but
they continue to get lost in the shuffle.
Ms. Coston--what can be done to help beneficiaries who filed before
the prioritization process was put into effect, and have been waiting
the longest? How are their inquiries handled if they call 1-800-
Medicare?
Answer. This question is best answered by either the ALJs or the 1-
800-Medicare contractor. Once the appeal is promoted to the QIC or ALJ
level, the MAC has no jurisdiction to engage in the processing of that
appeal. Certainly all beneficiary appeals could be handled by a special
council which could include MAC staff to handle them but this would
certainly be outside of the rules currently.
The 1-800-Medicare calls are handled by a contractor other than the
MACs.
______
Question Submitted by Hon. Benjamin L. Cardin
Question. Thank you for your testimony highlighting the serious
issue of the Medicare appeals backlog. In your testimony, you stated
that the most significant contributor to changes in the volume of
appeals has been the Medicare Recovery Auditors (RAs, formerly known as
Recovery Audit Contractors or RACs), noting that, using First Coast
Part A claims as an example, ``the overall percent of appeals driven by
RA decisions jumped from 7% in 2011 to 63% in 2013.''
I would like to bring to your attention an article recently
published in the Journal of Hospital Medicine regarding RAC audits and
appeals of complex Medicare Part A cases at three academic medical
centers (University of Wisconsin Hospital, University of Utah Health
Care and Johns Hopkins University Hospital).\1\ Sheehy et al. found
that:
---------------------------------------------------------------------------
\1\ Sheehy AM, Locke C, Engel JZ, Weissburg DJ, Mackowiak S, Caponi
B, Gangireddy S, Deutschendorf A, Recovery audit contractor audits and
appeals at three academic medical centers, J Hosp Med. 2015
Apr;10(4):212-9.
RAC overpayment determinations increased nearly three-fold during
the last two calendar years of the study (from 680 in 2010-2011
to 1,856 in 2012-2013), while the hospitals won, either in
discussion or appeal, a combined greater percentage of
contested overpayments each year (from 36.0% in 2010, to 38.5%
---------------------------------------------------------------------------
in 2011, to 46.1% in 2012, to 68.0% in 2013).
One-third (33.3%, 645/1935) of all resolved cases were decided in
favor of the hospital during the discussion period, with these
discussion cases accounting for two-thirds (66.8%) of all
favorable resolved cases for the hospital.
As noted above, the majority of successfully contested cases
occurred in the discussion period. However, because the discussion
period is not considered part of the formal appeals process, those
cases are not included in CMS or OIG reports of RA activity, suggesting
that RA auditing accuracy may have overestimated in those reports.
Additionally, the percentage and total number of determinations
successfully disputed by hospitals increased in each year studied,
reaching two-thirds of all cases in 2013, which raises questions about
the RAs' internal quality control processes.
Given your role in processing Medicare appeals, would you support a
proposal to mandate future federal reports of RA auditing and appeals
to include cases overturned in the discussion period; carefully
describe the denominator of total audits and appeals given the
likelihood that many appeals in a given year will not have a decision
in that year; and report Complex Part A, complex Part B, semiautomated,
and automated reviews separately?
Answer. We support publishing the results of audits; however, the
most accurate way to track the accuracy of any audit process is to
segregate numbers based on the type of claim reviewed within a single
audit. For example, the RAC initiated inpatient claim reviews and
selected claims in distinct data runs. Each claim selected within a
data run should become a discrete denominator and tracked across the
appeals process until the appeals process is exhausted. To mix samples
and denominators would not display an accurate representation. At the
end of each data run, that summary data could be aggregated for
reporting on the results of the audits for the inpatient claims only as
used in this example.
______
Questions Submitted by Hon. Michael F. Bennet
Question. As the panel has pointed out, the Office of Hearings and
Appeals (OMHA) received more than 654,000 claims in FY2013, up from
under 60,000 in FY2011, which has increased the backlog and average
processing time for an appeal's decision. What do you believe are the
primary causes of this dramatic increase in claims? And to follow-up,
what are some commonsense, balanced fixes to address the backlog that
could help ensure that seniors and their physicians are able to receive
and provide needed care?
Answer. The backlog, as stated in my written testimony, was
directly attributed to the implementation of the RAC contractors. With
the method of their payment being dependent on their recoveries, it
makes sense that the RAC reviewed the highest dollar claims where it
was likely that the documentation would be insufficient. It also is
logical that the hospitals, with so much money at risk, have continued
to pursue relief through the appeals process. CMS has effectively
implemented a solution with the Hospital Appeals Settlement Program
which has allowed providers to elect tosettle cases in lieu of
continuing through the appeals process.
Question. It's my understanding that while the vast majority of
providers are acting in good faith and filing appropriate and necessary
appeals, there may be a few bad actors taking advantage of this broken
system. As highlighted in a recent HHS Office of the Inspector General
(OIG) report, two percent of providers represent one-third of all
appeals. It is important that the Medicare audits and appeals system
has the capability to protect taxpayer dollars from exploitation by the
few who are bogging down the system for their own financial gain. In
your view, what can be done to alleviate the system from the burden of
these bad actors?
Answer. We recommend a two-prong approach. The first is to levy a
fee on providers who submit appeals. If they are found to be fully
favorable, the fee would be refunded. This would discourage the filing
of non-meritorious appeals thereby reducing the backlog and provide a
level of funding for reinvestment in program hiring and administration.
This should follow some level of documented provider education by the
contractor and a pattern of continuing to submit appeals when the
provider has received prior denials upheld. The second is to make this
behavior criterion in determining whether or not a provider should be
sanctioned. Repeated behavior that demonstrates a refusal to submit
claims correctly should have consequences, such as removal from
participation in the Medicare program.
Question. Historically, CMS has relied on claims administration
contractors to protect taxpayer dollars in the Medicare Trust Fund.
Since 2005, Medicare has used Recovery Audit Contractors (RACs) to
recover improper payments to providers. Although RACs have had some
success in returning improper payments to Medicare, their incentives to
recover payments for Medicare have come under significant scrutiny.
RACs are paid a percentage of every overpayment they identify and
collect from providers, and while some adjustments have been made to
their payment structure, their contingency-based payment contracts
still incentivize RACs to recover as many payments as possible. Some
have argued that aggressive RAC payment recoupment behavior has
contributed to the increase in appeals, as providers appeal more and
more claims. What role do you think RACs play in contributing to the
backlog of claims that is preventing seniors from getting needed care?
Answer. The backlog, as stated in my written testimony, was
directly attributed to the implementation of the RAC contractors. We
are not aware that this backlog has prevented seniors from getting
needed care.
Question. Ms. Coston, as you are well aware, many rejected claims
and appeals result from differences in regional coverage of services or
therapies. I have heard from many Colorado seniors who find out that a
service or therapy they need is covered in another Medicare region but
not in theirs. Often, it can take months or even years to get that same
service or therapy covered, leaving patients to suffer as they wait for
approval. Can you please provide some thoughts on the Local Coverage
Determination process, and whether it benefits seniors in the most
efficient way to ensure they have access to needed services and
therapies?
Answer. MACs develop local coverage determinations (LCD) through a
very specific process that involves input from the Medicare provider
community. Representatives from professional physician groups across
the jurisdiction participate in providing discussion and comment on
policy based on standard medical practice in that jurisdiction. LCD
topics are selected based on requests from providers for coverage and/
or to support the implementation of prepayment claims review activities
around services that are being used improperly in the jurisdiction. It
is not unusual for one part of the country with an academic center of
excellence to develop new technology and have it become more main
stream in practice ahead of other parts of the country. Similarly, some
jurisdictions have pockets of improper use and abuse of services that
necessitates establishing a LCD to support audit activities.
Question. Ms. Coston, I believe you mentioned that there is an
opportunity to better educate providers on appropriate documentation
and the proper claims submissions process. You also mention in your
testimony that some requests from providers might be better addressed
outside of the appeals process. Without adding additional
administrative burden, can you please elaborate on the best ways to
educate providers on the appeals process?
Answer. We routinely test ways to aid the provider community in
submitting claims correctly, correcting claim errors quickly and
helping them to appeal with adequate documentation to minimize rework
on everyone's part. While certainly funding is always a factor, one of
the ways in which we are trying to change this situation is through the
development of self service solutions such as our secure Internet
portals. The portals are designed to guide providers through the use of
templates to follow the process to submit the correct information.
______
Prepared Statement of Hon. Nancy J. Griswold, Chief Administrative Law
Judge, Office of Medicare Hearings and Appeals, Department of Health
and Human Services
Chairman Hatch, Ranking Member Wyden, and Members of the Committee,
thank you for the opportunity to discuss proposals for creating a more
efficient process for Medicare appeals. The Office of Medicare Hearings
and Appeals (OMHA), a staff division within the Office of the Secretary
of the U.S. Department of Health and Human Services (HHS), administers
the nationwide Administrative Law Judge (ALJ) hearing program for
Medicare claims and entitlement appeals under sections 1155, 1869,
1876, 1852, and 1860D, of the Social Security Act (the Act). OMHA is
charged with providing a fair and impartial forum in which Medicare
beneficiaries, and the providers and suppliers that furnish items or
services to Medicare beneficiaries, as well as Medicare Advantage
Organizations and Medicaid State Agencies, are able to resolve
disagreements with Medicare claim determinations.
background
Three separate agencies within HHS are charged with administering
the four levels of administrative review of Medicare claims appeals
within HHS. There is a fifth level of review with the federal district
courts after administrative remedies within HHS have been exhausted.
The first two levels of review are administered by the Centers for
Medicare and Medicaid Services (CMS) and conducted by Medicare
contractors. The third level of review is administered by OMHA and is
conducted by ALJs. Subsequent reviews are conducted at the fourth level
of appeal within the Medicare Appeals Council, which is within the
Departmental Appeals Board (DAB), and at the fifth level by the federal
district courts. In addition to Medicare claims appeals, individuals
may appeal a determination by the Social Security Administration (SSA)
that they are not entitled to Medicare benefits. This Medicare
entitlement appeals process consists of three levels of administrative
review and a fourth level of review with the federal district courts
after administrative remedies have been exhausted.
HHS established OMHA in June 2005, pursuant to section 931 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(Pub. L. 108-173) (MMA), which required the transfer of responsibility
for the ALJ hearing function of the Medicare claims and entitlement
appeals process from the SSA to HHS. OMHA was established to improve
service to appellants and to reduce the then average 368-day waiting
time for a hearing decision that appellants experienced with SSA to the
90-day time frame for issuing dispositions established in the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554).
In order to make certain that OMHA's adjudicators would have
decisional independence from CMS, OMHA was established as a separate
agency within HHS, reporting directly to the Secretary. Accordingly,
OMHA operates under a separate appropriation and is both functionally
and fiscally separate from CMS.
At the time OMHA was established, Congress envisioned that OMHA
would receive the same mix of work which had been handled by SSA:
Claim and entitlement appeals workload from the Medicare Part A
and Part B programs;
Coverage appeals from the Medicare Advantage (Part C) program;
Appeals of Income Related Monthly Adjustment Amount (IRMAA)
premium surcharges assessed by SSA, and
A new workload of appeals from the Medicare Prescription Drug
(Part D) program.
With this mix of work at the expected levels, OMHA was initially
able to meet the 90-day time frame that Congress contemplated for most
appeals coming before the new agency. However, starting in Fiscal Year
(FY) 2010, OMHA began to experience an upward trend in the number of
requests for hearings being filed, which resulted in longer average
processing times for appeals.
Although it is impossible to assign any single cause to the rapid
growth in Medicare appeals, it is possible to identify a number of
probable contributing factors. In 2010, OMHA began to take on new
workloads, including appeals that result from the Recovery Audit
program, which Congress established in 2006 and expanded nationwide
beginning in 2010. While the program has led to more appeals as
providers exercised their right to a hearing, the program has also
reduced improper payments and returned significant dollars to the
Medicare Trust Funds. During these same years, OMHA also experienced a
concurrent growth in its traditional workload. Between FY 2009 and FY
2014 OMHA's traditional workload increased 543%. In FY 2011 and FY
2012, OMHA also noted an increase in the number of appeals filed by
Medicaid State Agencies (MSAs) related to treatment for beneficiaries
dually enrolled in both Medicare and Medicaid. Finally, Medicare
enrollment has grown as the Baby Boom generation becomes Medicare-
eligible. Recent increases in SSA disability adjudications have also
resulted in the influx of larger numbers of younger disabled
individuals becoming eligible for Medicare benefits. This increase in
the number of beneficiaries utilizing Medicare services may be
resulting in a higher universe of potential disputes.
Although ALJ team productivity (dispositions per ALJ team) has more
than doubled from FY 2009 through FY 2014 (from an average of 472
dispositions per ALJ team per year in FY 2009 to 1,049 in FY 2014),\1\
the magnitude of the increase in workload has exceeded OMHA's ability
to adjudicate incoming appeals within the 90-day time frame that
Congress contemplated for most appeals. As a result of the significant
disparity between workload and capacity, adjudication time frames have
increased to their current level of 572 days (as of February 28, 2015),
and will continue to increase until receipt levels and adjudication
capacity are brought into balance.
---------------------------------------------------------------------------
\1\ These numbers do not include dismissals or remands. When
dismissals are included, the disposition numbers are 551 per ALJ team
per year in FY 2009 and 1,505 per ALJ team per year in FY 2014. The
dismissal numbers were higher than normal in FY 2014 due to appellants
withdrawing Part A appeals to avail themselves of a then-new option for
rebilling of hospital services under Part B and a single appellant's
withdrawal of a significant number of appeals as the result of a
negotiated court settlement. However, these levels do not represent a
sustainable disposition capacity for the agency.
In an effort to mitigate the impact of increased wait times on
individual beneficiaries, who we believe to be our most vulnerable
appellants, OMHA implemented a prioritization policy to ensure that
appeals filed by beneficiaries are assigned to ALJs and heard as
quickly as possible. These beneficiary-initiated appeals comprise
approximately 1% of all appeal requests OMHA receives, but often
concern emergent issues such as requests for pre-service authorization.
As a result of this prioritization policy, the average time to decision
for beneficiary appeals has improved. In February 2015, we estimated
that the average time to decision for beneficiary appeals decreased
from 244.6 days in FY 2013 to 125.0 days in FY 2014 (this calculation
does not include Part D expedited appeals, which operate on a much
---------------------------------------------------------------------------
shorter (10-day) time frame).
Over the past 5 years, OMHA has worked to maximize its productivity
by supporting each of its ALJs with enhanced processing teams
consisting of attorneys and other support staff. This has allowed each
ALJ to focus on hearing and deciding appeals--functions which can only
be performed by ALJs. However, OMHA's adjudication capacity is still
limited by the number of funded ALJ teams. Under the 2014 continuing
resolution, OMHA's funding level supported 65 ALJ teams. Enacted
funding increases in FY 2014 and FY 2015 have allowed for the hiring of
12 additional ALJ teams, bringing OMHA's adjudication capacity to
77,000 appeals. This funding also enabled OMHA to open its fifth field
office in Kansas City, the first additional office since OMHA opened
its doors in 2005. However, even this additional capacity pales in
comparison to the adjudication workload. In FY 2013 alone, OMHA
received approximately 384,000 appeals, and in FY 2014, approximately
474,000 appeals were received.
In the face of dramatically increasing workloads, the Department
recognized the need to deliver high quality and timely decisions on
benefits and services to the Medicare community with greater
efficiency, and under Secretary Burwell's leadership the Department has
undertaken a three-pronged strategy to improve the Medicare Appeals
process: (1) Take administrative actions to reduce the number of
pending appeals and to appropriately resolve claims at earlier levels
of the appeals process; (2) Request new resources to invest at all
levels of appeal to increase adjudication capacity and implement new
strategies to alleviate the current backlog; and (3) Propose
legislative reforms that provide additional funding and new authorities
to address and mitigate the appeals volume. The FY 2016 Budget includes
a comprehensive legislative package of seven proposals aimed both at
helping HHS process a greater number of appeals and facilitating the
appropriate resolution of appeals at earlier levels of the process. The
FY 2016 Budget also requests additional resources to enhance OMHA's
capacity to process appeals.
administrative actions to reduce the number of pending appeals and
appropriately resolve appeals at earlier levels of the appeals process
OMHA has taken the following administrative actions:
Leveraging Information Technology to Increase Efficiency--OMHA's
ALJ Appeal Status Information System (AASIS) was released in
December of 2014, and increases the accessibility of basic
information related to appeal status by implementing a
searchable database, which appellants can access through OMHA's
website. Electronic Case Adjudication and Processing
Environment (ECAPE) is OMHA's most ambitious electronic
initiative and will convert our business process from paper to
electronic over the next two years. ECAPE is planned as a three
phase implementation with the first release tentatively
scheduled for early spring of 2016. In anticipation of the
movement from paper files to electronic records, OMHA has
entered into a scanning contract, which will allow conversion
of existing paper appeal files into electronic format. OMHA has
also developed a Medicare Appeals Template System (MATS), which
simplifies the work of our staff by providing standardized
fillable formats for routine word processing.
Judicial Education Training--In July 2010, OMHA implemented
mandatory yearly training for ALJs, and expanded the program to
include other members of the adjudication staff in 2012. These
sessions provide consistent training to adjudicators on policy
issues related to Medicare appeals and routinely involve
collaborative training using policy experts from OMHA, CMS, and
the DAB. Special sessions have also included participation from
the HHS Offices of the Inspector General and General Counsel.
This joint training has been designed to increase decisional
consistency between adjudicators at all levels of appeal. Since
implementation of this joint training, the rate at which OMHA
ALJs reverse decisions from lower levels of appeal has
decreased from 63.2 percent in 2010 to their current rate of
43.0 percent, reflecting a more consistent application of
policy at all levels.
In Service Training Days were added to the training curriculum at
OMHA in 2013 to provide critical adjudicatory and
administrative training to all employees simultaneously via
video-teleconference.
OMHA's Quality Assurance Program assesses adjudicatory compliance
with procedural requirements and adjudicative norms, identifies
trends (both procedurally and substantively) encountered in the
adjudication of Medicare appeals and disseminates the lessons
learned as part of OMHA's continuing education program.
Although OMHA recognizes that decisions of the Medicare Appeals
Council are not precedential, we have implemented an enhanced,
searchable database of decisions by the Medicare Appeals
Council for use by our adjudicators.
Settlement Conference Facilitation Pilot uses alternative dispute
resolution techniques to resolve multiple appeals filed by a
single appellant without hearing. OMHA attorneys, who have been
trained in mediation techniques, facilitate a settlement
conference between an individual appellant and CMS
representatives.
Statistical Sampling Pilot allows appellants with qualifying
appeals to choose to have their claims adjudicated using
statistical sampling and extrapolation and would allow for the
resolution of large numbers of claims based upon resolution of
a statistically valid sample.
OMHA Case Processing Manual (OCPM) incorporates best practices in
case processing and establishes a standardized business
practice in all our field offices. The phased release of this
manual started in February, 2015.
Just to highlight one of the administrative initiatives listed
above, OMHA has implemented the Settlement Conference Facilitation
Pilot using existing staff, budget, and regulatory authorities.
Although new to the Medicare appeals process, mediation is a common
means of resolving disputes throughout the judicial and administrative
processes of government. To date, OMHA's settlement conference
facilitators have resolved over 1,000 appeals during this extremely
limited pilot. This represents the average productivity of an entire
ALJ team working for a full year. It is also important to note that
because these appeals are resolved by settlement of the underlying
dispute, there is no possibility of further appeal to the DAB.
request new resources to invest at all levels of appeal to increase
adjudication capacity and implement new strategies to alleviate the
current backlog
The 2016 President's Budget recognizes that even after efficiencies
have been obtained through the administrative actions discussed above,
significant additional funding will be required in order for OMHA to
handle the number of appeals reaching the third level.
The 2016 President's Budget funds increases in adjudication
capacity at OMHA by increasing its current budget of $87.3 million to
$270 million. The President's Budget proposes three sources for this
funding--$140 million from OMHA's discretionary appropriation, $125
million from recoveries resulting from the Recovery Audit program, and
$5 million (estimated) from new filing fees. The latter two funding
mechanisms are dependent upon passage of legislation which is included
in the President's Budget. This additional funding would provide for
the addition of 119 new ALJ teams and 82 Medicare Magistrates and
increase OMHA's yearly adjudication capacity from 77,000 appeals per
year to approximately 278,000 appeals per year. The President's Budget
assumes that appeal process reforms in the nature of those listed below
will be enacted which will allow OMHA to implement alternative
adjudication models at lesser cost and to receive partial funding of
its administrative costs from recovery audit reimbursements and filing
fees. The President's Budget also assumes that reforms will slow the
growth in the rate of appeals reaching OMHA.
propose legislative reforms that provide additional funding and new
authorities to address the appeals volume
The significant increase in adjudication capacity at OMHA is
dependent upon the enactment of the appeal reforms contained in the
President's Budget.
Provide Office of Medicare Hearings and Appeals and Departmental
Appeals Board Authority to Use RA Collections. This proposal
would expand the Secretary's authority to retain a portion of
Recovery Audit (RA) program recoveries for the purpose of
administering the recovery audit program and will allow RA
program recoveries to fully fund the appeals process for RA
related appeals at the OMHA and the DAB.
Establish a Refundable Filing Fee. This proposal would institute a
refundable per claim filing fee for providers, suppliers, and
Medicaid State Agencies, including those acting as a
representative of a beneficiary, at each level of appeal.
Appeals filed by beneficiaries or representatives of
beneficiaries other than providers, suppliers, and Medicaid
State Agencies would be exempt from the fee. Fees will be
returned to appellants who receive a fully favorable
determination. Under current law, there is no administrative
fee paid to the adjudicating entity for filing an appeal. A
filing fee would encourage those who frequently file to more
carefully assess the merits of their appeals before filing.
Sample and Consolidate Similar Claims for Administrative
Efficiency. This proposal would allow the adjudication of large
numbers of appeals through the use of sampling and
extrapolation techniques without appellant consent.
Additionally, this proposal would authorize the consolidation
of similar appeals into a single administrative appeal at all
levels of the appeals process for purposes of adjudicative
efficiency. This provision would also require that all appeals
that were included within an extrapolated overpayment or were
consolidated previously would remain a part of the extrapolated
or consolidated file on appeal.
Remand to Redetermination Level upon Introduction of New Evidence.
This proposal would require remand of a Medicare appeal to the
first level of review at CMS when new documentary evidence is
submitted into the administrative record at the second level of
appeal or above. The proposal would include exceptions to
mandatory remands if the basis for the submission is that new
evidence was provided to the lower level adjudicator but
erroneously omitted from the record, or an adjudicator denies
an appeal on a new and different basis than earlier
determinations. This proposal provides a strong incentive for
all evidence to be produced early in the appeals process and to
ensure the same record is reviewed and considered at the second
and subsequent levels of appeal.
Increase Minimum Amount in Controversy for ALJ Adjudication of
Claims to Equal Amount Required for Judicial Review. This
proposal would increase the minimum amount in controversy
required for adjudication by an ALJ to the Federal district
court amount in controversy requirement ($1,460 in 2015). It
would also clarify the circumstances under which claims can be
aggregated to meet the amount in controversy limit.
Establish Magistrate Adjudication for Claims with Amount in
Controversy Below New ALJ Amount in Controversy Threshold. This
proposal would allow OMHA to use attorney adjudicators to
resolve those appeals that meet the current ALJ amount in
controversy threshold ($150 in 2015) but fall below the amount
currently required to file an appeal in federal district court
($1,460 in 2015), reserving ALJs for development of a record in
more complex cases involving higher amounts in controversy,
which have the potential for appeal to federal district court.
Decisions of a Medicare Magistrate could be appealed to the
DAB, but would not meet the amount in controversy required to
be appealable to federal district court.
Expedite Procedures for Appeals with No Material Fact in Dispute.
This proposal would allow OMHA to issue decisions without
holding a hearing when there is no material fact in dispute and
the decision is governed by a binding authority. These cases
include, for example, appeals in which Medicare does not cover
the cost of a particular drug or the ALJ cannot find in favor
of an appellant due to binding limits on authority. This
proposal would increase the efficiency of the Medicare appeals
system and result in faster adjudications of appeals at the ALJ
level of appeal.
interdependency of proposals
The President's Budget maximizes adjudication capacity at OMHA by
incorporating appeals process reforms that allow for the utilization of
less expensive adjudication models for some appeals. For example, OMHA
estimates that the proposed Medicare Magistrate program would fund the
adjudication of approximately 82,000 appeals annually at a cost of $27
million. Funding the same 82,000 appeals using the existing ALJ process
would be almost twice as expensive at $52 million. Full implementation
of the Medicare Magistrate program is dependent upon two legislative
proposals currently in the President's Budget--the Increase Minimum
Amount in Controversy and the Medicare Magistrate proposal. Similarly,
if authorizations are not passed allowing OMHA to receive reimbursement
for the administrative costs of adjudicating recovery audit appeals and
to institute filing fees, its available resources would be cut in half
and its projected disposition capacity would be similarly reduced.
conclusion
OMHA is privileged to have an extremely dedicated workforce of both
ALJs and staff who remain committed to processing Medicare appeals that
are both timely and reflect the highest quality of decision making. The
Department continues to work to address the backlog of pending appeals
and to appropriately resolve disputed claims at earlier levels of the
appeals process. However, it has become apparent that administrative
initiatives which are possible within current budget authority and the
existing statutory framework are insufficient to close the gap between
workload and resources at OMHA. The Department is committed to bringing
these efforts and the resulting appeal workload into balance and
believes that the proposals contained in the 2016 President's Budget
will provide additional authorities which will enable us to begin to
restore that balance. With that goal in mind, OMHA continues to work
with departmental leaders to develop comprehensive solutions to its
growing workloads and looks forward to working with this committee and
our stakeholders to develop and implement these solutions.
______
Questions Submitted for the Record to Hon. Nancy J. Griswold
Questions Submitted by Hon. Orrin G. Hatch
Question. Providers report that the use of different appeals
numbers at various levels of appeal is confusing and hampers efficient
tracking. Might you consider implementing a uniform docketing system
across various levels of appeal?
Answer. The Office of Medicare Hearings and Appeals (OMHA) is the
third of four levels of appeal within HHS for Medicare claims appeals,
and currently uses the Medicare Appeals System (MAS) for case
management. MAS is also currently used by some Medicare Administrative
Contractors (MACs) for level 1 appeals, and all Qualified Independent
Contractors (QICs) for level 2 appeals. MAS assigns a new unique appeal
number for each new level of appeal. Changing the programing to re-
purpose the same appeal number would be costly and compete with other
essential upgrades to the system in a resource constrained environment.
However, OMHA is exploring the possibility of repurposing the level 2
appeal number for level 3 appeals when the OMHA Electronic Case
Processing Adjudication System (ECAPE) is implemented.
Question. Although the Office of Medicare Hearings and Appeals did
not oversee the CMS Global Settlement Offer because it was a CMS
initiative, the outcome of it directly affected your office. Do you
know how many claims have been dismissed pursuant to CMS's Global
Settlement Offer? In your opinion, did this make a dent in the appeals
backlog?
Answer. HHS is still in the process of verifying and completing the
review of the claims submitted for administrative settlement. The
Centers for Medicare and Medicaid Services (CMS) hospital appeals
settlement initiative will have a substantial effect on the number of
appeals pending before OMHA Administrative Law Judges (ALJs), as well
as those awaiting assignment. As appeals are verified as being
appropriately included in the settlement, they are dismissed by OMHA
and removed from the count of pending appeals. We anticipate that we
will have more precise numbers in the near future.
Question. There has been some controversy over whether the correct
Medicare policy standards are being applied and whether ALJ rulings
have been consistent across the board. The Administration's Fiscal Year
2016 budget request provides for increased ALJ training on Medicare
policy. This is an issue that the Office of Medicare Hearings and
Appeals has been working on. What progress can you report in this
regard?
Answer. In July 2010, OMHA implemented its Judicial Education
Symposium (JES) program, which is an annual series of in-depth
continuing education events on Medicare law and policy that all ALJs
are required to attend. The JES provides consistent training to OMHA
ALJs on Medicare policy issues and coverage standards. In addition, in
February 2011, OMHA implemented a formal week-long training program for
all new ALJs hired by OMHA focused on Medicare law and policy, and the
administrative appeals processes. OMHA delivered the fifth new ALJ
training session in May of 2015. Finally, in 2013, OMHA implemented a
monthly ``In-Service'' program of seminars and training sessions for on
board ALJs, also focused on Medicare law and policy, and the
administrative appeals processes.
OMHA has partnered with Departmental experts from CMS, the Food and
Drug Administration (FDA), the Office of Inspector General (OIG), the
Office of the General Counsel (OGC), and the Departmental Appeals Board
(DAB) to deliver JES sessions, and other continuing education events.
The joint training has been designed to increase decisional consistency
among OMHA ALJs through education by policy experts. Since
implementation of the JES, new ALJ training, and the In-Service
programs, OMHA has seen significant change in the rate at which ALJs
reverse decisions from lower levels of appeal. The reversal rate has
decreased from 63.2 percent in FY 2010 to the current rate of 43.0
percent.
Question. What thoughts do you have on the President's budget
proposals and whether they will make the differences purported, or do
we need to continue to also explore other legislative alternatives?
Answer. The legislative proposals, taken together with the
additional resources requested in the FY 2016 President's Budget, are
instrumental to reducing the appeals backlog and setting the framework
for bringing the Medicare appeals process into balance going forward.
OMHA believes that instituting a refundable filing fee will encourage
more providers, suppliers, and other non-beneficiary appellants to
consider the merits of their claims before filing appeals, which will
address some of the demands currently being placed on the appeals by
appellants who do not appear to consider the merits of their claims
before filing appeals. Providing authority for case consolidation and
the authority to group claims together to allow for a single decision
on multiple claims, would ensure future appeals are handled more
efficiently. Also, the addition of 119 ALJs and 82 Medicare magistrates
will increase OMHA's decision-making capacity from 77,000 appeals per
year to approximately 278,000 appeals per year, which will make a
significant difference in addressing the backlog and establishing a
sustainable model for the timely adjudication of future appeals. If the
case consolidation provision is given retroactive application and
applied to pending appeals, it will further help address the backlog by
providing a tool to more efficiently group pending appeals for
adjudication. These proposals work in tandem and are dependent on one
another to have the projected impacts.
While enacting the proposals is a critical first step, the
Department continues to pursue additional measures that may be taken at
a legislative or regulatory level. OMHA received 92 responses to a
November 5, 2014, Request for Information from program stakeholders
with suggestions on how to improve the appeals process. The Department
is currently reviewing those suggestions. In addition, a Departmental
inter-agency workgroup was established in 2013, which includes leaders
from the agencies involved in the Medicare claims appeals process (CMS,
OMHA, and DAB). This inter-agency group reviewed the appeals process
and developed a series of initiatives that both OMHA and CMS are
implementing to reduce the current backlog of pending appeals and the
number of appeals that reach OMHA, and continues to meet on a regular
basis.
Question. Finally, as we continue to develop our statutory response
to these issues, what would be the one thing that you would change to
improve the flow of the appeals process?
Answer. Adding adjudicatory flexibilities to the statutory appeals
framework would have the greatest impact on the flow of the appeals
process. Specifically, alternate adjudicators (Medicare magistrates)
could be authorized to make decisions on those claims which have no
possibility of reaching federal court due to the low amounts in
controversy. Other flexibilities, such as summary disposition authority
when no material facts are at issue and the outcome of the appeal is
mandated by a binding authority, and the ability to decide appeals
using statistical sampling and extrapolation techniques, would add
efficiencies to the appeals process at all levels. These changes alone
would improve the flow of cases from one level of appeal to the other.
The existing Medicare claims appeal structure is a complex process
controlled by a fixed statutory and regulatory framework. Increased
receipts have stressed the appeals process and there are limited
adjustments OMHA can make to adequately accommodate the influx of
appeals. For example, the current statutory and regulatory framework
requires that all level-three appeals be adjudicated by an
Administrative Law Judge, and all appeals must be adjudicated
independently, even in repetitive circumstances such as ongoing,
monthly rentals of durable medical equipment (DME). If Medicare
providers and suppliers continue to avail themselves of their right to
appeal adverse determinations in record numbers, adjudicators would
benefit from additional authorities that allow for more efficient
adjudication as proposed in the FY 2016 President's Budget, such as the
Medicare magistrates. The measures proposed in the FY 2016 President's
Budget would create a more flexible (and cost-efficient) appeals
process and allow OMHA to become more nimble and to more quickly
respond to rising workloads.
Question. Recent data from OMHA indicate that a large portion of
the dollars recouped by RACs from Part B providers, as much as 50%, is
coming from patient care providers of prosthetics and orthotics--
artificial replacement limbs and bracing--but this group of health
professionals account for less than 0.5% of Medicare expenditures. The
unit cost of replacement limbs is relatively high so RACs, which are
incentivized by percentage of funds they recoup, are focusing on this
group even though data show that these limb providers have the highest
success ALJ appeal rate of any Part B providers. Are there any controls
on RACs from concentrating excessively in one area simply because
returns per efforts expended in the short run may be substantial?
Answer. OMHA defers to our colleagues at CMS as the agency that
oversees the Recovery Auditor program. In order to make certain that
OMHA's adjudicators would have decisional independence from CMS, OMHA
was established as a separate agency within HHS, reporting directly to
the Secretary. Accordingly, OMHA operates under a separate
appropriation and is both functionally and fiscally separate from CMS.
______
Questions Submitted by Hon. Chuck Grassley
Question. For the last couple of years, there has been constant
controversy over the battle between Medicare providers, especially
hospitals, and recovery audit contractors (RACs). When an appeal is
heard, someone wins and someone losses, but there's no public
scorekeeping of wins and losses. We believe that open accounting could
cut down on frivolous findings by RACs, frivolous appeals by providers,
and lackadaisical rulings from the reviewers.
There is a value in transparency when government is engaged in the
people's business. In this case, the appeals process is in desperate
need of transparency. Regularly, I will have providers tell me they win
90% of their appeals. Then minutes later, I will get visits from
auditors who tell me they are winning 90% of their appeals. Clearly,
those numbers do not add up.
The appeals process would benefit from an open and transparent
accounting of appeals outcomes. If we are concerned about frivolous
findings against providers, frivolous appeals of auditor findings, and
reviewers not devoting adequate consideration to the policy issues,
transparency would shine a light on all parties to the process.
Is there any reason you can think of that we should NOT publish, in
the aggregate, the appeals outcomes, essentially wins and losses by
provider and auditor at your level of the appeal process?
Answer. OMHA is committed to data transparency and continues to
examine what data are available and relevant to our stakeholders.
However, OMHA appeal outcomes represent only the third of four levels
of administrative appeal within HHS, so these data would provide only a
limited snapshot of the larger picture. For example, an ALJ decision
may be subject to further review by the Medicare Appeals Council if the
appellant files a request for review,CMS (or its contractors) refers
the case to the Council for review, or the Council decides on its own
motion to review the ALJ decision.
In addition, we note that the primary challenge for OMHA in
providing this type of information is the availability and structure of
the data in our version of the Medicare Appeals System (MAS) case
management system, which is necessarily focused on data related to case
processing at the ALJ level of appeal. Aggregate provider appeal
outcome data can most easily be expressed in relation to a Medicare
Part (such as Part A or Part B), or a category of services (for
example, inpatient hospital services, physicians, durable medical
equipment suppliers, skilled nursing facilities, and ambulance
companies). We do not believe that our data currently identify the
underlying auditor associated with an appeal.
Question. Is there any reason you can think of that we should NOT
publish, in the aggregate, the appeals outcomes by the specific ALJs so
we can look at them comparatively?
Answer. While there is no statutory impediment to publishing these
data and OMHA is considering doing so in the near future, OMHA believes
that ALJ outcome data may be subject to misinterpretation because large
numbers of appeals involving a single or similar issue may be assigned
to an ALJ. The decision on the issue may then have a significant impact
on the ALJ's outcome statistics. These data anomalies may increase as
OMHA works through its backlog and assigns larger groups of similar
cases to ALJs. There is also a potential issue with comparative
statistics having some influence on decision outcomes, if ALJs feel
pressure to achieve outcome statistics within a specific range.
Additionally, publishing an individual ALJ's outcomes could result in
appellants attempting to forum shop by seeking recusals from ALJs who
they believe may not rule in their favor based on outcome data, even
though the ALJ is acting impartially.
______
Questions Submitted by Hon. John Thune
Question. Rural providers often operate on the margins and these
types of delays leave providers in limbo for far too long. At the ALJ
level is there any consideration being given to expedite the appeals of
small or rural providers' appeals?
Answer. Currently, OMHA prioritizes appeals filed by beneficiaries,
who are our most vulnerable appellants. These appeals, which include
Part D expedited appeals and other beneficiary-appellant appeals--
including pre-service appeals arising under Part C, receive first
priority at every stage of the appeals process; they are immediately
assigned to an ALJ, and prioritized for hearing and decision by the
assigned ALJs. Provider, supplier, and other non-beneficiary appeals
are assigned and heard in the order in which they were received. We
have considered additional prioritization of our workload as a result
of suggestions received from appellants in response to our Request for
Information. However, additional prioritization is problematic for a
number of reasons. First, OMHA's case tracking system does not have a
way to identify small or rural providers. Second, in addition to rural
or small providers, there have been multiple requests for
prioritization of other workload. We have also received requests to
prioritize high dollar value appeals and appeals in which large
overpayments are being recouped. We recognize that processing delays
have a significant impact on providers and suppliers regardless of the
number of claims at issue or the amount in controversy, but since
prioritizing one group will necessarily be at the expense of another,
additional prioritization is not advisable at this time.
We also note that where an appellant has submitted a request for
hearing following a Medicare Part A or Part B Qualified Independent
Contractor (QIC) reconsideration, the appellant may request an
escalation to the next level of review (the Medicare Appeals Council)
if the ALJ does not render a decision within 90 days after a complete
request for hearing was timely filed with OMHA. This ``escalation''
process was built into the statute to ensure that appellants can
continue to pursue their appeals if the ALJ is unable to adjudicate an
appeal within the 90-day timeframe envisioned by Congress. More
information on the escalation process is available on the OMHA website
(www.hhs.gov/omha), under the ``Coverage and Claims Appeals'' tab.
Question. A 2012 Health and Human Services (HHS) Office of
Inspector General (OIG) Report stated that in FY 2010, Administrative
Law Judges (ALJ) reversed prior-level decisions and ruled fully
favorable or partially favorable to the appellant over 60 percent of
the time. How can we reform the appeals process to ensure that there is
greater continuity in decisions at both the ALJ and the prior-levels in
order to give providers more predictability in the audit and appeals
process?
Answer. The difference in outcomes across appeal levels is
attributable to a number of factors, including: the introduction of new
and additional evidence, the opportunity for an appellant to orally
present his or her testimony at the ALJ level of appeal, the non-
binding authority of informal CMS manuals and other program guidance on
ALJs, and the winnowing of appeals as some appellants select only their
most meritorious claims for appeal. These occurrences are a natural
consequence of the Medicare appeals system as established by Congress,
and are not necessarily attributable to a lack of training or knowledge
of Medicare policy on the part of OMHA ALJs.
Generally, under the current appeals structure, CMS or its
contractors may also refer ALJ decisions or dismissals to the Medicare
Appeals Council for ``own motion review'' if they believe that an ALJ
decision contains an error of law material to the outcome of the claim
or presents a broad policy or procedural issue that may affect the
public interest.
CMS, OMHA, and the Medicare Appeals Council communicate at the
leadership and staff levels on a variety of appeals process
coordination matters. When there are large numbers of appeals in a
given area that implicate a current or potential policy interpretation
variance, the general matter can be raised and discussed, and
appropriate action on the general issue taken, such as conducting
additional training with OMHA and Medicare Appeals Council staff.
In addition, as reflected in the response to the Chairman's third
question, OMHA has developed multiple training and continuing education
resources for OMHA ALJs, and OMHA has seen significant change in the
rate at which ALJs reverse decisions from lower levels of appeal. The
reversal rate has decreased from 63.2 percent in FY 2010 to the current
rate of 43.0 percent.
Question. Information provided in the same 2012 HHS OIG report
stated there were concerns about consistency in individual ALJ approval
and rejection rates. Approvals ranged from 18 to 85 percent in FY 2010.
What can Congress do to again provide more consistency in ALJ rulings
that would in effect provide greater certainty at all level of appeals?
Answer. ALJs must act within the scope of legal authorities and
give deference to local coverage determinations and CMS program
guidance. However, each ALJ has qualified decisional independence under
the Administrative Procedure Act (APA). Because individual adjudicators
are applying the law and coverage policy to facts (which vary from case
to case), some level of disparity in outcomes is inherent in the
adjudication process. Although every effort is made to ensure
consistent decision making, differences in decisional outcomes occur
between adjudicators at the ALJ level, as well as between claims
reviewers at the lower levels of the appeals process.
While some variances among adjudicators will continue, OMHA has
made significant efforts to maximize consistency. OMHA works with CMS
to deliver expert-led training sessions on Medicare policy and its
application to common claims scenarios such as emergency medical
treatment, non-emergency ambulance transport, billing and coding
initiatives, and determinations of inpatient admission status. CMS also
provides regular updates to OMHA adjudicators as it adjusts or
clarifies existing policies, such as the Two-Midnight Rule for
inpatient hospital stays and continuation of care issues resulting from
Jimmo v. Sebelius. These sessions have been extremely instructive for
adjudicators and have led to greater consistency among appeal levels.
As a result of these and other training initiatives, OMHA has seen a
marked decrease in the rate at which ALJs reverse decisions from lower
level adjudicators, down from 63.2 percent in FY 2010 to the current
level of 43.0 percent.
One area where standardization is possible is the OMHA business
process. This is one way to ensure that ALJs are applying the relevant
authorities consistently and availing themselves of the most efficient
means to process an appeal. Standardization also provides a more
uniform experience for appellants nationwide, regardless of where or by
whom their appeal is heard.
OMHA's commitment to business process standardization is evidenced
in two initiatives: the OMHA Case Processing Manual (OCPM) and the
Medicare Appeals Template System (MATS). OMHA launched its new manual
internally in March 2015, documenting agency policy and incorporating
best practices from the field. The OCPM will increase efficiency in
case processing and can be updated to allow for continued innovation.
It also increases the flexibility of support staff to move between
judge teams. In addition, OMHA has developed MATS, a sophisticated
document generation system that will improve the quality and
consistency of OMHA decisions and documents and increase overall
efficiency. First rolled out to field offices in March 2014, MATS
standardizes and streamlines decision and document drafting and is
being updated on a rolling basis. These templates do not decide cases,
but can be used to guide analysis and standardize language articulating
the applicable law and policy. The system prevents common document
errors by pulling data from our electronic case management system and
populating that data directly into documents, which is especially
important in such a high volume environment.
These initiatives are a foundation for a more consistent and
efficient process going forward and with the funding and authorities
proposed in the FY 2016 President's Budget, Congress can ensure that
resources are available to continue and further these standardization
efforts.
______
Questions Submitted by Hon. Richard Burr
Question. Between Fiscal Year 2009 and Fiscal Year 2014, the number
of appeals received by the Office of Medicare Hearings and Appeals
increased by more than 1,300 percent. What are the most significant
contributing factors to the changes in the volume of appeals?
Answer. Several factors have contributed to the growth in Medicare
Appeals. In FY 2010, OMHA started receiving appeals from the permanent
Recovery Audit program, which represented a new source of appeals
workload. During this same time period, OMHA experienced concurrent
growth in the traditional appeals workload that OMHA had been receiving
since it began operations in 2005; between FY 2009 and FY 2014 OMHA's
traditional workload alone increased by 543%. In FY 2011 and FY 2012,
OMHA also saw an increase in the number of appeals filed by Medicaid
State Agencies related to the treatment of dual-eligible beneficiaries
(beneficiaries who are enrolled in both Medicare and Medicaid).
Finally, the increase in workload may be partially attributable to
increases in Medicare enrollment as the ``baby boom generation'' and
more individuals determined to be disabled under the Social Security
disability program become Medicare-eligible, which may be increasing
the number of beneficiaries utilizing Medicare services and resulting
in a higher universe of potential disputes.
Question. How would annual judicial education training address some
of the issues associated with the timeliness and predictability of the
appeals process for both providers and beneficiaries going through an
appeal?
Answer. OMHA's annual Judicial Education Symposium provides an
opportunity to train adjudicators on emerging issues in Medicare
coverage policy and frequentlyinvolves experts from CMS as presenters.
In addition, OMHA implemented a formal, mandatory training program for
all new ALJs that focuses on Medicare law/policy and adjudicative
business processes.
OMHA is working toward providing appellants with a more uniform and
predictable experience with the appeals process by standardizing our
business process through the creation and issuance of the OMHA Case
Processing Manual (OCPM). OMHA launched this manual internally in March
2015, and plans to provide public notice via the Federal Register and
then post the manual on our public website. The OCPM documents agency
policy and incorporates best practices from the field. It will increase
efficiency in case processing and can be updated to allow for
innovation. This initiative will help to ensure that judges are
applying the relevant authorities consistently and availing themselves
of the most efficient means to process an appeal. This standardization
also provides a more uniform experience for appellants nationwide,
regardless of where or by whom their appeal is heard. It also increases
the flexibility of support staff to move between judge teams.
Question. How have the alternative dispute resolution techniques
been received by providers seeking to appeal decisions? Are a certain
subset of providers utilizing this option? Have any lessons emerged
from the Settlement Conference Facilitation Pilot that could be drawn
upon as we continue to look for ways to address concerns with the
current state of the audit and appeals processes?
Answer. When OMHA offered appellants the option to resolve pending
appeals through the OMHA Settlement Conference Facilitation pilot, we
did so in a limited capacity due to staffing and resource limitations.
As it currently exists, the pilot is limited to appellants who filed
requests for hearing on a Medicare Part B Qualified Independent
Contractor (QIC) reconsideration during a particular period of time and
that met certain other criteria. As such, the appellants who have
participated thus far have been primarily Part B suppliers of Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) and
outpatient therapy. As of May 13, 2015, OMHA received 24 requests
involving a total of 4,273 claims to participate in the pilot.
Currently, eight requests are pending. Of the remaining 16 requests, 6
requests resulted in a settlement of a combined 1,574 appeals involving
1,617 claims. OMHA rejected five for failure to meet eligibility
criteria, three did not result in settlement between the parties, and
CMS declined to participate in two.
OMHA is encouraged by the results of the initial pilot, which, as
of May 2015, has resolved the equivalent of one-and-a-half ALJ teams'
annual workload (1,500 appeals), at a considerable cost savings to
OMHA. The primary lesson learned from this pilot is that the initial
eligibility criteria may have been too restrictive, as many other
appellants have informally expressed an interest in being able resolve
their appeals through an alternative dispute resolution process.
Question. If the Office of Medicare Hearings and Appeals were to
move forward with the concept of allowing adjudication of large numbers
of appeals through the use of sampling and extrapolation techniques,
how would this be done in a statistically sound manner?
Answer. OMHA would manage this effort through a current contract
that provides access to qualified, independent statistical experts. The
OMHA experts would ensure sampling conducted at the ALJ level conformed
to the standards outlined in the CMS Program Integrity Manual, which
provide instructions to CMS contractors on the use of statistical
sampling to calculate and project overpayment amounts to a universe of
claims.
______
Questions Submitted by Hon. Ron Wyden
resources needed to improve the appeals system
Question. During the hearing you shared that the current
adjudication capacity of the Office of Medicare Hearings and Appeals
(OMHA) is approximately 77,000 appeals. You also shared that in FY 2014
alone, your Office received approximately 474,000 appeal requests.
These requests are in addition to the pervasive backlog already
existing at your level of review.
Simple math makes it quite clear that this type of capacity falls
severely short. While I appreciated your testimony regarding efforts
that have increased adjudication capacity within your current
resources, it sounds as though many of these concepts have been
exhausted. This year, the President's budget suggested that an
additional $127 million be appropriated to the Department of Health &
Human Services, OMHA, to address the growing backlog of appeals.
Can you please share how your office would utilize the $127
million, if so appropriated, to decrease the backlog?
Answer. The funding and legislative proposals requested in the FY
2016 President's Budget include both discretionary budget authority and
program level funding from proposed legislation, totalling $182.6
million above the FY 2015 enacted level. This request positions OMHA to
process more Medicare appeals by providing resources to establish six
new field offices and expand two current field offices to the full
complement of 18 ALJ teams. These offices will support 119 new ALJ
teams nationwide, compared with the projected 77 teams on board by the
end of FY 2015. These new teams will collectively increase output by
119,000 additional appeal dispositions a year.
The additional funding also supports several HHS and OMHA
initiatives to address the workload by alternate adjudication methods
such as 82 Medicare Magistrates and additional attorney adjudicators
and settlement conference facilitators.
Question. How many appeals could be processed annually if this
Congress were to adopt the recommendations of the President?
Answer. OMHA's annual adjudication capacity would increase by 261%
(from 77,000 appeals per year to approximately 278,000 appeals per
year) with just the increase in ALJ teams and the establishment of
Medicare Magistrates. It is anticipated that other alternative
adjudication methods such as expansion of OMHA's Settlement Conference
Facilitation pilot will further increase adjudication output.
Question. How would the President's policy recommendations
otherwise impact the incoming requests for appeal?
Answer. It is anticipated that the legislative proposals in the FY
2016 President's Budget will have an impact in reducing the number of
new appeals entering the system. For example, the institution of a
refundable filing fee at each level of appeal should encourage
providers to more carefully assess the merits of their appeals before
filing.
the use of medical expertise to adjudicate medically complex cases
Question. Anecdotally, I have been informed that cases involving
``medical necessity,'' or those cases which require significant
clinical review and input to effectuate, are most frequently subject to
higher level appeal requests. I also understand that such cases are
timely to review, and at the lower levels of appeal are reviewed by a
clinician, such as a nurse and/or physician.
Given that the majority of your staff do not have clinical
backgrounds or expertise, can you please walk through how such cases
are typically handled under the current process?
Answer. The cases that are appealed to and processed by OMHA
include a variety of issues. Many issues do not require a clinical
background or expertise to properly adjudicate because they involve
appeals of technical denials for services that are not covered or
appeals where regulatory guidelines or policies set forth criteria that
establishes medical necessity, and therefore coverage. These types of
appeals require the application of a specific set of policies or rules
to a specific set of facts to establish coverage. In cases where
medical necessity is not well defined by either a specific regulation
or policy, OMHA adjudicators have the opportunity to obtain clinical
opinions regarding medical necessity. Options for obtaining clinical
opinions include adjudicator review of the medical opinions from the
medical review panel at the lower level of appeal (in the QIC's
decision and administrative record); allowing expert medical opinion
testimony by the appellant or any other party (including CMS
contractors if they appear as a party or participant); and review of
medical records and testimony by an independent medical expert at the
request of OMHA. OMHA maintains a contract to ensure that expert
testimony is available to its adjudicators if necessary. These
independent experts are compensated for their testimony out of OMHA's
budget and are independent of CMS or any other parties. Therefore, in
the cases where clinical expertise is required, OMHA adjudicators have
the opportunity to obtain clinical opinions regarding medical necessity
and to weigh the opinions in light of the entire evidence in the
record.
Question. Do you think that it may be useful to uniformly require
adjudicators at OMHA to seek the clinical opinion of an independent
expert in making such appeal decisions? Why or why not?
Answer. As discussed above, OMHA adjudicators have the opportunity
to obtain several clinical opinions regarding medical necessity.
However, a significant number of appeals adjudicated by OMHA do not
require specific clinical expertise or opinion, but rather are legal
decisions. Requiring independent expert opinions in all appeals
regardless of need would significantly increase the cost and time
required to adjudicate OMHA appeals. The best use of OMHA's resources
is to make decisions concerning the need for clinical opinions on a
case by case basis.
Question. Do you believe the use of a clinical expert could
increase consistency and decrease the potential for variation? Why or
why not?
Answer. Anecdotally, OMHA experience is that there is as much
variation in the opinions of clinical experts as there is within OMHA
adjudicators; thus, we are not confident that mandating the use of
clinical experts would increase consistency or decrease the potential
for variation. As mentioned previously, OMHA has maintained a clinical
expert witness contract since its inception, and OMHA adjudicators have
used significant numbers of clinical expert witnesses in a variety of
appeals over the years. It has been OMHA's experience that there were
some experts who were more likely to give favorable testimony to
appellants, while others were more likely to offer favorable testimony
to support the denial, for similar facts. In these cases OMHA
adjudicators often act to increase consistency and decrease the
potential for variation by assigning appropriate weight to the clinical
expert opinions before them, after considering the entire record and
clinical expert testimony from all parties/participants. A significant
number of appeals OMHA processes do not require specific clinical
expertise, and therefore would not benefit from the use of a clinical
expert.
improving efficiency through electronic case files and
interconnectivity
Question. During the hearing, Tom Naughton of Maximus Federal
Services explained that if a claim the QIC has reviewed is then
appealed to OMHA under the current appeals system, the QIC employees
must print out their electronic copy so that the OMHA may perform the
third level of review using a paper copy. I also understand that OMHA
is diligently working towards an electronic case file system--expected
to be released next spring--entitled the Electronic Case Adjudication
and Processing Environment, or ``ECAPE.'' I commend your efforts and
look forward to its timely release.
The testimony also indicated that this type of interconnectivity is
currently limited, but could assist with both providing transparency
for the appellant regarding their appeal's status, as well as
assurances to the reviewer that the case file is unaltered and
complete.
Once the ECAPE system is activated, do you anticipate that all
levels of review will be electronically interconnected so that case
files may be safely and electronically accessed and/or transmitted at
all review levels?
Answer. Adjudicators at levels 1 and 2 of the Medicare Parts A and
Part B claims appeals process currently use the electronic case files
in the Medicare Appeals System (MAS). ECAPE will interface with MAS,
allowing level 3 adjudicators secure, electronic access to claims
files. At this time, the Medicare Appeals Council does not use MAS for
case management but is exploring the use of electronic records.
Question. Do you think the use of electronic case files will help
OMHA to monitor the incidence of new evidence that is submitted at the
third level of review?
Answer. Yes, ECAPE will include the capability to track the
submission of new evidence at level three.
______
Questions Submitted by Hon. Charles E. Schumer
Question. The New York State Office of the Medicaid Inspector
General has seen alarming increases in the percentage of Medicare
appeal denials as well as substantial increases in the time to obtain
decisions. At the first two levels of appeal, Medicare contractors are
denying over 99% of the appeals. For ALJ's the 90 day statutory
requirement is not being met in over 99% of cases. The current wait is
averaging 562 days and will continue to grow since OMHA has announced
that they have suspended the assignment of new appeals for 2 years.
Overall, there are currently 124,246 episodes backlogged at the ALJ
level and for appeals that have actually reached a final decision, we
are averaging 1,135 days from the Medicaid date of service. Despite
seminal decisions in federal district courts that support the
appellants, we are seeing favorable decisions rates by the ALJs trend
downward--from 26% for FFY 2008 cases to 16% for FFY 2010 cases. Under
the demonstration project where third party arbitration services were
used instead of OMHA's ALJs, favorable decisions were granted in 69% of
the cases.
The Office of Medicare Hearings and Appeals (OMHA) has yet to offer
a feasible administrative remedy to State Medicaid agencies (sampling,
mediation). Further, State Medicaid agencies are excluded from
participating in some of the offered remedies.
Will the OMHA be willing to discuss the potential for a revised
demonstration model with the State of NY?
Answer. The goal of this demonstration would be to reduce the
administrative burdens on both the current Medicare appeals system and
its stakeholders. More importantly, assist with clarifying coverage
guidelines related to home health services for dual eligible
beneficiaries thus reducing the frequency of misdirected claims/
appeals.
While OMHA does not have demonstration authority or authority to
settle appeals on its own, OMHA has been working with CMS and a limited
number of appellants in certain circumstances through our Settlement
Conference Facilitation pilot. As we gain experience with the
Settlement Conference Facilitation pilot, we will consider whether we
can use this experience to improve the appeals process for Medicaid
State Agencies.
Question. You testified in July that more than 800,000 appeals were
pending. What is that status of the backlog today, following the
completion of the CMS settlement, and how long will it take to clear
the remaining backlog? What will you do to prevent the backlog from
rising again?
Answer. HHS is in the process of verifying and completing the
review of the claims submitted for administrative settlement. As
appeals are verified as being appropriately included in the settlement,
they will be dismissed by OMHA and removed from the count of pending
appeals. We anticipate that we will have more precise numbers in the
near future. As of March 31, 2015, OMHA had 870,000 appeals pending.
Any projections related to reducing the backlog of appeals must
take into consideration the projected impact of the administrative
initiatives underway and the full adoption of the FY 2016 President's
Budget. Because several of the proposals in the President's Budget are
designed to appropriately resolve disputes at earlier levels of the
appeals process, thus reducing appeal levels at OMHA, a portion of the
success of the proposals is dependent upon the way in which appellants
respond to the proposed changes. For example, the implementation of a
filing fee is designed to provide an incentive for providers to
carefully evaluate their claims prior to filing and to appeal only
their most meritorious claims to the later levels of the appeals
process. The impact of other provisions concerning the way appeals may
be aggregated to reach the required amount in controversy for an ALJ
hearing and provisions related to early submission of evidence (which
would require lower level reviewers to have access to the same
information being relied upon at the ALJ level) will also be largely
dependent upon appellant behavior. Regardless, there still must be a
balance between receipts and capacity to adjudicate incoming appeals
without expanding adjudication capacity too rapidly and over building
the agency. With the current pause of the Recovery Audit program, there
is a projected leveling of receipts, but the end state of annual
receipt levels is uncertain. OMHA recognizes that any comprehensive
endeavor of this magnitude would be better addressed over several years
for fiscal as well as programmatic reasons to ensure resources match
what our future annual workloads are likely to require while carefully
monitoring the impact of Departmental initiatives and legislative
reforms.
Under Secretary Burwell's leadership, the Department has developed
an approach to reduce the risk of a future backlog through
administrative actions, additional funding, and legislative reforms to
mitigate the appeals volume, including initiatives to resolve disputed
claims at earlier levels of the appeals process. OMHA, with
Departmental support, is committed to bringing these efforts to
fruition. The full adoption of the FY 2016 President's Budget will
allow OMHA to significantly increase its adjudicatory capacity above
its FY 2015 level and will begin to restore the balance between
workload and resources going forward.
______
Questions Submitted by Hon. Sherrod Brown
recovery audit contractors (racs)
Question. RACs are another tool CMS uses to audit potentially
improper payments. The RAC system was permanently established by
Congress in 2010, following a 3-year demonstration. RACs are paid on a
contingency-fee basis based on their identification of improper
payments.
In 2012, RACs returned almost $2 billion to Medicare. Over half of
the funds appeals received by the Office of Medicare Hearings and
Appeals (OMHA) are RAC-related. Today, OMHA is funded only by
discretionary appropriations.
It seems as though the enormous spike in appeals that has
overwhelmed the system is mainly attributable to hospital appeals of
RAC determinations.
Judge Griswold--would you support a separate appeals system for
those claims? Do you have suggestions for how that could work?
Answer. Because the same coverage rules apply regardless of whether
a claim arises from pre-payment or post-payment review, establishing a
separate appeals system for Recovery Audit appeals would add complexity
and uncertainty to the system and would ultimately be
counterproductive. A separate appeals system would also result in
greater disparities in outcomes, and would likely confuse appellants.
OMHA already hears appeals arising from separate claims/coverage
appeals processes for Part A and B appeals; Part C Medicare Advantage
appeals; Part D prescription drug appeals. OMHA also hears Medicare
eligibility and entitlement appeals arising from the Social Security
Administration (SSA), including Part B Late Enrollment Penalties (LEPs)
and Income Related Monthly Adjustment Amounts (IRMAAs). Even within
these separate appeals processes, differences arise. For example, the
first level of appeal for a Part A or B appeal may be conducted by the
Medicare Administrative Contractor (MAC), a Quality Improvement
Organization (QIO), or the Benefits Coordination and Recovery Center
(BCRC). From there, most of the redeterminations (excluding certain QIO
medical necessity and appropriateness of setting reviews) have a second
level of appeal conducted by a QIC. While most decisions made by a QIC
or QIO are appealable to an ALJ, certain decisions, such as QIO
Diagnosis Related Group (DRG) coding validations, are not. Introducing
a separate appeals process for Recovery Audit appeals would increase
confusion, make an already complex appeals system more intricate, lead
to greater disparity in decisional outcomes and frustrate the primary
goal of streamlining the appeals process.
administrative law judge (alj) appeal
Question. In FY 2013, OMHA received more than 654,000 claims. This
was up from just under 60,000 in FY 2011. Despite the significant
increase in claims, the total number of judges available to hear and
decide cases remained the same, at just over 60.
As a response to this increase in claims, OMHA temporarily
suspended the assignment of most new requests for ALJ hearings from
providers, and HHS has attempted to put in place some reforms to help
speed the system along. However, despite the pause in new cases, these
delays persist for both beneficiary and provider appeals.
I have heard from both providers and beneficiaries in Ohio who
believe that the first and second level of appeals are often a ``rubber
stamp'' of the initial determination, and that very little
consideration is given until the ALJ appeal, where it seems that a
large percentage of claims are reversed.
Judge Griswold--of those claims that are appealed to the ALJ level,
what is the reversal rate for provider-initiated claims? What is the
reversal rate for beneficiary- initiated claims?
Answer.
Reversal Rate for Non-Beneficiary-Initiated Claims
FY13 50.5%
FY14 40.0%
FY15 (year to date) 43.0%
Reversal Rate Beneficiary-Initiated Claims
FY13 31.5%
FY14 33.4%
FY15 (year to date) 34.1%
The calculation includes all non-beneficiary appeals instead of
only provider requested appeals to account for those appeals that have
a requester type other than provider and beneficiary. Reversal rate is
the total of Favorable and Partially Favorable dispositions divided by
the total appeals with Favorable, Partially Favorable, Unfavorable, and
Dismissed dispositions.
making the system more friendly for beneficiaries
Question. Despite the fact that the Medicare appeals system was
created with beneficiaries in mind, we know that it is providers who
file the vast majority of appeals. In 2010, for example, Medicare
beneficiaries filed just 11% of the appeals heard by ALJs.
Today, beneficiary-initiated appeals continue to make up a
proportionally small percentage of the total number of appeals, but
they continue to get lost in the shuffle.
Judge Griswold--what has OMHA done to prioritize beneficiary-
initiated appeals? What more can be done to ensure timely review of
beneficiary-initiated cases and make the current system more
beneficiary-friendly?
Answer. Individual beneficiaries are among the most vulnerable
appellants. In 2013, OMHA began prioritizing beneficiary-initiated
appeals, and in 2014, established a dedicated mail-stop for
beneficiary-initiated appeals, to ensure those appeals are quickly
identified and assigned to an ALJ for hearing. OMHA worked with CMS to
update lower level appeal instructions to alert beneficiaries to this
mail-stop. Our prioritization measures have resulted in beneficiaries
getting a decision more quickly. In February 2015, we estimated that
the average time to decision for beneficiary appeals decreased from
244.6 days in FY 2013 to 125.0 days in FY 2014 (this calculation does
not include Part D expedited appeals, which operate on a much shorter
(10-day) time frame). Similarly, the total number of aged beneficiary
appeals at the agency has been reduced.
At the beginning of the first quarter in FY 2014, OMHA had 1,620
beneficiary appeals older than 90 days. As of April 26, 2015, OMHA had
358 beneficiary appeals older than 90 days. This figure includes
appeals that have been delayed at the beneficiary's request, such as
postponing a hearing to accommodate a hospitalization, to obtain a
representative/attorney, or to obtain and submit additional records.
Question. Judge Griswold--what can be done to help beneficiaries
who filed before the prioritization process was put into effect, and
have been waiting the longest? How are their inquiries handled if they
call 1-800-Medicare?
Answer. If a beneficiary filed a request for hearing and believes
that it has not been prioritized, he or she may contact OMHA
Headquarters by writing to OMHA Headquarters, 1700 N. Moore St., Suite
1800, Arlington, VA 22209, calling 703-235-0635, or emailing
[email protected]. Beneficiaries may also contact OMHA using our
national toll-free number 855-556-8475.
Question. Judge Griswold--given that beneficiaries are often the
most vulnerable appellants and are who the Medicare program is meant to
serve, in addition to the fact that beneficiary-initiated appeals
represent such a small percentage of overall appeals, would you support
maintaining full procedural rights and protections for them, e.g., not
assigning their cases to ``Magistrate'' ALJs, and not increasing the
amount-in-controversy threshold?
Answer. OMHA recognizes the vulnerability of individual
beneficiaries and has prioritized beneficiary-initiated appeals to
expedite their processing and resolution. In most cases, Medicare
beneficiaries and enrollees have already received the item or service
that is the subject of a claim or coverage dispute, and the only
remaining question is payment responsibility. Only in certain
circumstances (e.g., Part D requests for drug coverage, Part C pre-
service authorization requests, hospital discharge appeals, and
provider service terminations) might provision of an item or service
depend on the outcome of the appeal. We continue to prioritize
expedited Part D appeals that must be adjudicated within 10 days, as
well as pre-service appeals arising under Part C and other beneficiary
appellant appeals.
In their current formulation, the legislative proposals contained
in the FY 2016 President's Budget are designed to provide flexibility
and additional protection to beneficiary-appellants. For example,
beneficiaries would be exempt from the filing fee proposal and the
proposal requiring remand to the redetermination level when new
evidence is introduced at a later level of appeal. However, we
acknowledge that some portion of beneficiary appeals would fall within
the proposed changes to the amount in controversy and the Medicare
magistrate process. We believe that procedures can be put in place
through regulations to balance the impact on the beneficiary population
with the efficiencies gained through the magistrate process.
______
Questions Submitted by Hon. Michael F. Bennet
Question. As the panel has pointed out, the Office of Hearings and
Appeals (OMHA) received more than 654,000 claims in FY 2013, up from
under 60,000 in FY 2011, which has increased the backlog and average
processing time for an appeal's decision. What do you believe are the
primary causes of this dramatic increase in claims? And to follow-up,
what are some commonsense, balanced fixes to address the backlog that
could help ensure that seniors and their physicians are able to receive
and provide needed care?
Answer. The legislative proposals outlined in the FY 2016
President's Budget will provide the most balanced, effective means of
reducing the Medicare appeals backlog, and ensuring that OMHA and other
HHS components have the continuing resources to prevent another backlog
from developing.
Several factors have contributed to the growth in Medicare Appeals.
In FY 2010, OMHA started receiving appeals from the permanent Recovery
Audit program, which represented a new source of appeals workload.
During this same time period, OMHA experienced concurrent growth in the
traditional appeals workload that OMHA had been receiving since it
began operations in 2005; between FY 2009 and FY 2014 OMHA's
traditional workload alone increased by 543%. In FY 2011 and FY 2012,
OMHA also saw an increase in the number of appeals filed by Medicaid
State Agencies related to the treatment of dual-eligible beneficiaries
(beneficiaries who are enrolled in both Medicare and Medicaid).
Finally, the increase in workload may be partially attributable to
increases in Medicare enrollment as the ``baby boom generation'' and
more individuals determined to be disabled under the Social Security
disability program become Medicare-eligible, which may be increasing
the number of beneficiaries utilizing Medicare services and resulting
in a higher universe of potential disputes.
OMHA believes that the legislative proposals outlined in the FY
2016 President's Budget will provide the most balanced, effective means
of driving down the Medicare appeals backlog, and ensuring that OMHA
and other HHS components have the continuing resources to prevent
another backlog from developing.
Question. It's my understanding that while the vast majority of
providers are acting in good faith and filing appropriate and necessary
appeals, there may be a few bad actors taking advantage of this broken
system. As highlighted in a recent HHS Office of the Inspector General
(OIG) report, two percent of providers represent one-third of all
appeals. It is important that the Medicare audits and appeals system
has the capability to protect taxpayer dollars from exploitation by the
few who are bogging down the system for their own financial gain. In
your view, what can be done to alleviate the system from the burden of
these bad actors?
Answer. To some extent, the number of appeals filed by an
individual provider or supplier is the result of the level of scrutiny
and auditing to which the provider or supplier is subject. However,
OMHA believes that instituting a refundable filing fee will encourage
more providers, suppliers, and other non-beneficiary appellants to
consider the merits of their claims before filing appeals, which will
address some of the demands currently being placed on the appeals by
appellants who do not appear to consider the merits of their claims
before filing appeals. Currently, OMHA sees instances in which
providers and suppliers appear to have not reviewed, or only cursorily
reviewed, the basis for the denial of their claims at the initial
determination level and the lower levels of appeal. These appellants
provide only the most basic argument with their request for hearing and
frequently do not address specific documentation deficiencies
identified by the Medicare contractors. Some appellants also withdraw
their request for hearing just prior to a hearing, after considerable
resources have already been devoted to processing the appeal,
supporting the conclusion that they gave the claims only a cursory
review prior to appealing. OMHA believes a refundable filing fee would
be the most reliable measure to discourage this behavior.
Question. Historically, CMS has relied on claims administration
contractors to protect taxpayer dollars in the Medicare Trust Fund.
Since 2005, Medicare has used Recovery Audit Contractors (RACs) to
recover improper payments to providers. Although RACs have had some
success in returning improper payments to Medicare, their incentives to
recover payments for Medicare have come under significant scrutiny.
RACs are paid a percentage of every overpayment they identify and
collect from providers, and while some adjustments have been made to
their payment structure, their contingency-based payment contracts
still incentivize RACs to recover as many payments as possible. Some
have argued that aggressive RAC payment recoupment behavior has
contributed to the increase in appeals, as providers appeal more and
more claims. What role do you think RACs play in contributing to the
backlog of claims that is preventing seniors from getting needed care?
Answer. OMHA defers to our colleagues at CMS as the agency that
oversees the Recovery Auditor program. In order to make certain that
OMHA's adjudicators would have decisional independence from CMS, OMHA
was established as a separate agency within HHS, reporting directly to
the Secretary. Accordingly, OMHA operates under a separate
appropriation and is both functionally and fiscally separate from CMS.
However, we do note that the Recovery Audit appeals in the backlog
involve claims for services that have already been furnished (that is,
the Medicare beneficiary has already been provided with the care).
There is a small subset of non-Recovery Audit pending appeals that
involve pre-service or termination of coverage issues filed by
beneficiaries, but these are prioritized as beneficiary appeals and
immediately assigned to an ALJ, and then prioritized for a hearing and
decision as quickly as possible.
______
Prepared Statement of Hon. Orrin G. Hatch,
a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
today delivered the following opening statement at a committee hearing
on Medicare audit and appeals:
Our hearing today will consider audit and appeals issues in
Medicare. As some of you may recall, in July 2013, the Finance
Committee held a hearing focused on audits of Medicare providers. At
that time, Chairman Baucus and I were concerned by some of the stories
we were hearing from hospitals, doctors, and others in the medical
community. That hearing gave us insight into some of the problems
audits pose for providers.
Now we turn to an issue that is directly tied to those audits:
Medicare appeals.
I just returned from my home state of Utah, where Medicare issues
remain a serious concern for my constituents. For the past two years,
like many members here, I have heard about the terrible backlog of
Medicare appeals.
Before I move on to the appeals process in detail, I want to
mention that improper Medicare payments continue to be a serious
issue--and a big part of the reason that we're seeing such a backlog in
appeals.
Last month the GAO released a report on Government Efficiency and
Effectiveness. The report found that, in Fiscal Year 2014, Medicare
covered health services for approximately 54 million elderly and
disabled beneficiaries at a cost of $603 billion. Of that figure, an
estimated $60 billion, or approximately ten percent, was improperly
paid, totaling over $1,000 in improper payments for every single
Medicare beneficiary.
These numbers are unacceptable. This error rate must be lowered to
ensure the viability of the Medicare Trust Fund so that Medicare can
continue serving beneficiaries for years to come.
CMS has, of course, taken steps to identify and recover improper
payments, including hiring contractors to conduct audits of the more
than one billion claims submitted to the Medicare program every year.
These auditors have recovered billions for the Medicare program--over
$3 billion in 2013 alone. However, the increase in audits has led to a
seemingly insurmountable increase in appeals, with a current backlog of
over 500,000 cases, evidenced by this chart
This increase in appeals has resulted in long delays for
beneficiaries and providers alike. There are so many appeals that the
Office of Medicare Hearings and Appeals can't even docket them for 20
to 24 weeks. In FY 2009, most appeals were processed within 94 days. In
FY 2015, it will take, on average, 547 days to process an appeal--far
too long for beneficiaries to find out whether their medical services
will be covered or for providers to find out if they will be paid.
Additionally, large portions of the initial payment determinations
are reversed on appeal. The HHS Office of Inspector General reported
that, of the 41,000 appeals that providers made to Administrative Law
Judges in FY 2010, over 60 percent were partially or fully favorable to
the defendant.
Such a high rate of reversals raises questions about how the
initial decisions are being made and whether providers and
beneficiaries are facing undue burdens on the front end. On the other
hand, we need to recognize that ALJs have more flexibility in their
decision-making than Medicare contractors do.
During the July 2013 hearing, we expressed our hope that CMS would
consider the balance between program integrity with administrative
burden on providers. CMS has taken steps to show it is considering that
balance. These steps include decreasing the burdens on providers,
increased oversight of auditors, and more transparency in the programs.
When any Medicare contractor--either an auditor or a contractor
that processes claims--decides that a claim should not be paid, it has
a real effect on beneficiaries and providers, which is why it is so
important that the appeals process allow these appeals to be heard in a
timely and consistent fashion.
The Office of Medicare Hearings and Appeals has also taken steps to
address its backlog, but there is only so much the agency can do with
their current authorities and staffing.
Senator Wyden and I, and the other members of this committee, are
committed to finding ways to make the appeals process work more
efficiently and effectively in order to ease the burden on
beneficiaries and providers and to protect the Medicare Trust Fund.
Today we have the opportunity to hear from those that are closest
to the Medicare appeals process. I want to thank our witnesses for
appearing today to help us understand the issues that they face in
dealing with the large number of Medicare appeals. I look forward to
hearing their perspectives on how that process might be changed to
create a more efficient and level playing field.
______
Prepared Statement of Thomas Naughton, Senior Vice President,
MAXIMUS Federal Services, Inc.
introduction
I would like to thank Committee Chairman Senator Hatch, Ranking Member
Senator Wyden, and honorable members of the Committee for providing
MAXIMUS Federal Services the opportunity to discuss the Medicare appeal
program and areas for potential efficiencies and enhancements to the
program.
Since 1989 MAXIMUS Federal Services, Inc. (MAXIMUS Federal) and our
affiliates have served as a Qualified Independent Contractor (QIC) for
the Centers for Medicare and Medicaid Services (CMS). In this role we
have completed more than two million Medicare appeals across all Parts
of Medicare addressing all forms of Medicare benefit and payment
disputes.
Throughout our partnership with CMS we served as the Part A East QIC
(since 2005), the Part A West (from 2008 to 2015), the Part B South QIC
(from 2005 to 2014), the Part C QIC (since 1989), the Part D QIC (since
2006) and the Administrative QIC (since 2004).
Our QIC work is the hallmark of our largest market segment--Independent
Benefit Appeals and Independent Medical Review. We are the largest
provider of these services in the United States and currently serve
more than 50 Federal and state clients.
MAXIMUS Federal Services is a wholly owned subsidiary of MAXIMUS, Inc.
MAXIMUS, Inc. is a global government services organization, based in
Reston, Virginia that provides services to Federal, State, and Local
government entities. We have no contracts with any commercial entity
including any health care payer or provider. We take pride in the fact
that MAXIMUS has no direct or material in-direct conflict of interest
in helping government serve the people. This independence is part of
our mission and is also a statutory requirement for our QIC contracts
and Medicaid contracts we administer throughout the United States.
the qualified independent contractor program
Pursuant to 1869(a)(1) of the Social Security Act a qualified
independent contractor (QIC) is defined as ``an entity or organization
that is independent of any organization under contract with the
Secretary that makes initial determinations.'' The organizations
encompassed within the meaning of section 1869(a)(1) include, but are
not limited to, Medicare Administrative Contractors (MACs), Zone
Program Integrity Contractors (ZPICs), Recovery Audit Contractors
(RACs), and/or Quality Improvement Organizations (QIOs).
The primary goals of the QIC program include:
u Timely adjudication of reconsiderations and expedited
reconsiderations of initial determinations using established
protocols
u Case management and documentation into the Medicare Appeals System
(MAS) (including document imaging)
u Collection and transmission of information regarding the receipt and
disposition of reconsiderations and expedited reconsiderations
via the MAS
u Integrated document imaging to produce a complete second level
electronic case file
u Participation and coordination with other entities in the Medicare
appeals chain including CMS, the Administrative QIC (AdQIC),
ACs, the ALJ Hearing Offices, and the Departmental Appeals
Board (DAB)
CMS awards task orders to perform QIC work under an Indefinite
Delivery/Indefinite Quantity (IDIQ) contract for QIC work based on
established jurisdictions and/or claim type as follows:
u Two QIC jurisdiction-based task orders (East and West) for Part A
appeals
u Two QIC jurisdiction-based task orders (North and South) for Part B
appeals,
u One QIC jurisdiction-based task order for DME appeals
u One QIC task order for Part C appeals
u One QIC task order for Part D appeals
In addition to these seven task orders, CMS awards one task order to
perform administrative and data analysis tasks for Parts A, B, and DME
of the QIC program, otherwise referred to as the Administrative QIC
(AdQIC) task order.
At a very high level the process of an appeal is illustrated below.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
There is a five-level appeals process \1\ that affords providers,
suppliers, beneficiaries, and other parties an opportunity to dispute
initial payment decisions on Medicare claims. While some differences
exist in processing and terminology based on the type of claim being
appealed (Part A/B/durable medical equipment (DME), Part C, or Part D),
the levels themselves are relatively consistent as described in the
table below.
---------------------------------------------------------------------------
\1\ 42 CFR Subpart 1, Sec. 405.
\2\ The Part C IRE work is currently competed as a task order under
the QIC Indefinite Delivery/Indefinite Quantity (IDIQ) contract.
\3\ The Part C IRE work is currently competed as a task order under
the QIC Indefinite Delivery/Indefinite Quantity (IDIQ) contract.
------------------------------------------------------------------------
Medicare Fee-
For-Service Medicare Medicare
Appeal Level (FFS) Claim Part C Part D
Appeals Appeals Appeals
------------------------------------------------------------------------
Level One Redeterminat Reconsidera Redetermina
ion by a tion by tion by
Medicare Health Part D
Administrat Plan Plan
ive sponsor
Contractor:
An
independent
review of
an initial
determinati
on of a
Medicare
fee-for-
service
(FFS)
claim.
------------------------------------------------------------------------
Level Two Reconsiderat Reconsidera Reconsidera
ion by a tion by an tion by an
QIC: Independen IRE: \3\
t Review
Entity
(IRE): \2\
An An An
independent independen independen
, on-the- t review t review
record, of a of a
review of health sponsor's
an initial plan's adverse
determinati adverse redetermin
on, reconsider ation or
including ation or an
the an independen
redetermina independen t review
tion and t review when the
all issues when the plan fails
related to health to meet
payment of plan fails the
the claim. to meet adjudicato
the ry
adjudicato timeframes
ry of an
timeframes initial
for an coverage
organizati determinat
on ion or
determinat redetermin
ion or ation
reconsider request.
ation
request.
------------------------------------------------------------------------
Level Three Hearings before an Administrative Law
Judge (ALJ) within the Office of
Medicare Hearings and Appeals
within the Department of Health and
Human Services:
Under FFS provisions, if a party is
dissatisfied with a QIC's
reconsideration or if the
adjudication period for the QIC to
complete the reconsiderations has
elapsed, a party may request an ALJ
hearing. Under Part C provisions, if
any party to the reconsideration
(except the Health Plan) is
dissatisfied with the IRE's
reconsideration determination, the
party may request an ALJ hearing.
Under Part D provisions, if the
enrollee or enrollee's representative
is dissatisfied with IRE's
reconsideration, the enrollee may
request an ALJ hearing.
The amount in controversy (AIC) to
appeal at the ALJ level for 2015 is
$1,504.\4\
------------------------------------------------------------------------
Level Four Review by the Medicare Appeals Council
within the Departmental Appeals Board
in the Department of Health and Human
Services:
An on-the-record review of an ALJ's
decision.
------------------------------------------------------------------------
Level Five Judicial review in Federal District
Court:
A review of the decision by Federal
District Court. The AIC to appeal at
the Federal District Court for 2015
is $1,460.
------------------------------------------------------------------------
Part A Qualified Independent Contractors (QIC)
MAXIMUS Federal Services has been the Part A East contractor since
2005. Part A East reviews disputed claims from Part A providers,
including disputes involving claims processed by MACs, RACs, QIOs,
ZPICs, and PSCs.
---------------------------------------------------------------------------
\4\ The AIC requirement for all ALJ hearings and Federal District
Court reviews is adjusted annually in accordance with the medial care
component of the Consumer Price Index. The table above reflects the
calendar year 2015 AIC amounts.
Medicare Part A covers some of the costs of providing medically
necessary inpatient hospital care, skilled nursing facility care
following a hospital stay, home health care, and hospice care.
Individuals entitled to Social Security or Railroad Retirement benefits
are automatically entitled to Part A hospital insurance beginning with
the first day of the month in which the individual attains the age of
65. Those younger than age 65 who receives Social Security disability
benefits and those with end-stage renal disease (ESRD) are also
entitled to Part A. Individuals who worked in certain Medicare-
qualified federal, state, or local government employment may also
---------------------------------------------------------------------------
qualify for coverage provided certain conditions are met.
Part A also provides CMS support in ALJ hearings through party and non-
party participation in a select number of hearings and through adhoc
reporting.
Volume Challenges
MAXIMUS faced several issues that are directly related to the rapid,
unprecedented volume that inundated us with appeals in spring and
summer of 2013. We were faced with drastic increases in the appeal
volumes that were not anticipated in the initial contract. These
increases were so dramatic that they effectively constituted
requirements far beyond any foreseeable expectation of performance
under this contract. To provide some context, in February 2010, we
received a total of 4,953 appeals. In February 2012, we received a
total of 12,865 appeals, an increase of 159%. In February 2013, 1 year
later, we received 45,520 appeals, which is an increase of 253% over
2012 and 815% in the prior 2 year period.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
In order to respond to the increasingly high volumes of appeals, we
established an approach to increase our staff and our contracted
physician medical reviewer panel and by adding subcontractors. We built
and implemented Expert Gateway (EG) to allow remote users to connect to
our Virtual Desktop Infrastructure (VDI) server. The driving force
behind using the VDI solution was data security. The VDI is a secure
environment that is controlled by MAXIMUS. Users cannot save data
locally or copy, paste, or print data. All data is processed, saved,
and archived on our VDI server.
In addition to adding staff and improving technology to address the
increased volume we evolved our work processes. Such process changes
included developing specialized teams to address specific case types
allowing them to become Subject Matter Experts in their case types.
This approach allowed us to be more agile with our responsiveness to
volume fluctuations as we are able to rapidly increase the number of
available clinicians. Using increased staff, new technology and
improved processes, MAXIMUS Federal Services was able to resolve the
backlog that began in Spring of 2013 as of September 2013.
Part B South Qualified Independent Contractors (QIC)
MAXIMUS Federal Services, through its wholly owned subsidiary Q2
Administrators, has been the Part B South contractor since 2006. Part B
South reviews disputed claims from Part B providers, including disputes
involving claims processed by MACs, RACs, ZPICs, and PSCs.
Medicare Part B covers some of the costs of receiving medically
necessary services from physicians and other health care providers.
Part B also covers some of the costs of medically necessary outpatient
care, durable medical equipment, transportation, home health care, and
some preventive services.
Part B also provides CMS support in ALJ hearings through party and non-
party participation in a select number of hearings and through adhoc
reporting.
Part C Qualified Independent Contractor (QIC)
MAXIMUS has been the sole Part C contractor since 1989 (the contract
was originally held by a firm which MAXIMUS acquired). We address
expedited pre-service cases (72-hour turnaround), standard pre-service
cases (30-day turnaround) and standard retrospective claim payment
cases (60-day turnaround) from various types of Medicare Advantage
plans.
We review appeals for denials related to all services covered by
Medicare Parts A and B: inpatient hospital, skilled nursing facility,
hospice, and home health care and services; services from doctors and
other health care providers, outpatient care, durable medical
equipment; and some preventive services. In addition, most plans also
include extra (``supplemental'') benefits and services such as routine
dental care, eyewear, or fitness programs. In addition to medical
necessity issues, we also review cost-sharing, ``lock-in,'' and health
plan dismissals. Most appeals are submitted by Medicare beneficiaries
and non-contract providers, both physicians and facilities.
Part D Qualified Independent Contractors (QIC)
The Part D QIC provides independent reconsideration of denials
affecting Medicare beneficiaries. We have adjusted our staff and
resources as necessary over the years to accommodate the fluctuations
in both drug and Late Enrollment Penalty (LEP) appeals. MAXIMUS has
been the only contractor in Part D since the inception of the program.
We review prescription drug denials from MAPDs and PDPs. We process
both Redeterminations and Reopenings for issues in dispute which
include formulary and tiering exceptions, prior authorization and other
utilization management issues, medical necessity, off-label usage, and
cost sharing. We review Late Enrollment (LEP) appeals as well.
The Administrative QIC (AdQIC)
MAXIMUS, through our wholly owned subsidiary Q2Administrators, has been
the AdQIC since 2004. Under the AdQIC task, we provide administrative
processes associated with Fee-for-Service (FFS) QICs. We develop,
deliver, and update standard work protocols and training curriculums;
produce Joint Operating Agreement (JOA) templates between the QICs and
outside contractors; analyze data to identify appeals trends and spot
improvement opportunities; analyze ALJ decisions for possible
Departmental Appeals Board (DAB) review; manage document imaging;
retain and store case files; and prepare draft CMS reports to Congress
about the appeals processes. We support appeal statistics and
programmatic support, the Office of General Council, and DOJ with case
files for pending litigation.
Five Year QIC Volumes
QIC Part A East
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent
Year Received Dismissed Escalated Favorable Misrouted Partially Unfavorable Percent Overturned
Favorable Overturned (All)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010........................................................ 2,758 3,965 150 2,316 55,099 10.2% 9.8%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011........................................................ 3,641 6,942 162 3,069 58,813 14.5% 13.8%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012........................................................ 4,624 620 23,572 108 2,900 183,247 12.6% 12.3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2013........................................................ 8,190 990 43,965 357 6,999 306,687 14.2% 13.9%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014........................................................ 2,985 13 36,999 278 3,524 187,570 17.8% 17.5%
--------------------------------------------------------------------------------------------------------------------------------------------------------
QIC Part A West
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent
Year Received Dismissed Escalated Favorable Misrouted Partially Unfavorable Percent Overturned
Favorable Overturned (All)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010........................................................ 1,251 1,763 243 1,671 15,082 18.5% 17.2%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011........................................................ 1,401 3,298 115 908 24,610 14.6% 13.9%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012........................................................ 2,224 525 16,258 75 1,134 79,532 17.9% 17.5%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2013........................................................ 4,328 584 37,377 177 846 149,923 20.3% 19.8%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014........................................................ 1,657 12 26,595 206 2,318 85,074 25.4% 25.0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
QIC Part B South
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent
Year Received Dismissed Favorable Misrouted Partially Unfavorable Percent Overturned
Favorable Overturned (All)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010..................................................... 14,227 37,912 436 22,617 68,455 46.9% 42.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011...................................................... 12,185 34,679 414 27,032 68,986 47.2% 43.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012...................................................... 29,801 55,397 492 32,291 101,589 46.3% 39.9%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2013...................................................... 20,016 45,670 548 31,779 81,658 48.7% 43.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014...................................................... 14,356 38,268 397 28,162 76,978 46.3% 42.0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
QIC Part C
--------------------------------------------------------------------------------------------------------------------------------------------------------
Partly
Dismiss Overturn Overturn Uphold Withdraw Percent Percent
Year Received Appeal MCO MCO MCO Appeal Overturned Overturned
Denial Denial Denial (All)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010........................................................ 27,623 5,996 962 25,737 2,218 21.3% 11.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011........................................................ 36,117 4,677 675 24,671 2,458 17.8% 7.8%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012........................................................ 73,848 4,829 730 27,725 2,592 16.7% 5.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2013........................................................ 82,936 3,956 338 28,029 4,084 13.3% 3.6%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014........................................................ 10,605 3,412 306 30,048 2,411 11.0% 7.9%
--------------------------------------------------------------------------------------------------------------------------------------------------------
QIC Part D--Drug
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fully Partially Percent
Year Received Dismiss Reverse Reverse Remand Uphold Withdraw Percent Overturned
Appeal Plan Plan to Plan Plan Appeal Overturned (All)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010.......................................................... 6,438 5,654 219 1 6,572 75 47.2% 31.0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011.......................................................... 5,036 3,372 200 7 5,107 30 41.2% 26.0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012.......................................................... 5,836 2,105 119 8 6,018 46 27.0% 15.7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2013.......................................................... 5,127 4,091 210 144 14,108 36 23.4% 18.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014.......................................................... 5,923 3,731 291 60 12,666 21 24.1% 17.7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
QIC Part D--LEP
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent
Year Received Dismiss Fully Partially Uphold Withdraw Percent Overturned
Reverse Reverse Overturned (All)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010........................................................ 8,137 17,152 1,713 7,931 320 70.4% 53.5%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011........................................................ 9,158 15,134 1,813 9,638 53 63.7% 47.3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012........................................................ 7,025 17,469 2,190 10,521 51 65.1% 52.8%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2013........................................................ 7,926 17,228 2,142 11,186 55 63.4% 50.3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014........................................................ 9,368 20,688 2,565 13,558 49 63.2% 50.3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent Overturned excludes Dismissed, Withdrawn, Escalated, Misrouted, Remanded Dispositions in the denominator.
Percent Overturned (All) includes all Dispositions in the denominator.
quality assurance in our qic work
Our QA Department regularly and continuously selects a random sample of
appeals in progress for each staff member. We recognize the importance
of monitoring the quality of all aspects of an appeal, from the
accuracy of the decision itself to the rationale used to arrive at the
decision to the data recorded in the MAS. We draw a statistically valid
sample of appeals from the previous month that exceeds the USOW minimum
requirement of 50 decisions per month. This sample includes at least
one decision per adjudicator per month. Sampling at this level allows
for the evaluation of each staff member as well as the overall project
performance. We review the validity of the decision, parties to the
appeal, handling of requests for information, quality of the medical
review, rationale supporting the decision, quality of the decision
letter, and accuracy of the Medicare Appeal System (MAS) data. The
results of the quality reviews and in-line structured audits are
recorded and measured to identify trends or weaknesses in the process.
In addition to our internal QA processes each of our QIC programs is
evaluated annually by CMS's outside independent Evaluation and
Oversight contractor, Optimal Solutions.
Based upon our most recently reported audit by Optimal Solutions on our
Part A East project, CMS rated MAXIMUS very good for quality of
product. Under this audit CMS conducted a review of the quality of the
QIC activities and overall compliance with the Statement of Work (SOW)
requirements under this contract including review of more than 70
appeal case files. Through this quality review, CMS found that 95% (57
of the 60) of the standard and expedited reconsiderations reviewed were
accurate, and 90% (70 of the 78) of the total cases reviewed met all of
the remaining contractual requirements for overall timeliness of
activities, quality of decision letters and/or case file organization
in accordance with the SOW. Similarly for our Part A West project CMS
rated us very good for quality of product finding 98.0% (59/60) of the
standard and expedited reconsiderations reviewed were accurate and
92.0% (59/64) of the total cases reviewed met all of the remaining
contractual requirements for overall timeliness of activities, quality
of decision letters and/or case file organization in accordance with
the SOW.
For our Part B South project CMS rated MAXIMUS very good for quality of
product. CMS found that 97% (58 out of 60) of the reconsiderations
reviewed were accurate and 90% (63 out of 70) of the total cases
reviewed met all of the remaining contractual requirements for quality
decision letters and/or case file organization in accordance with the
SOW.
For our Part C project CMS found MAXIMUS exceptional for quality of
product indicating agreement with 98% of the reviewed decisions. For
the AdQIC project CMS rated MAXIMUS exceptional for quality of product
finding 98% (112/114) of the cases sampled without error. The results
or our most recent Part D audit have yet to be released.
efficiencies and enhancements
CMS continually works diligently with all stakeholders in the audit and
appeals process to improve the efficiency and effectiveness of the
programs. Examples of recent CMS enhancements to the program include:
u Support of electronic records. Medicare Administrative Contractors
are permitted to send case file records via secure electronic
delivery system which ensures faster, cheaper and more
efficient transfer of information. CMS is providing
organization support to MFS creation of portal to receive
appeal requests/information from appellants and Level 1
entities.
u MACs' use of the Medicare Appeal System (MAS). This permits first
level reviewers to utilize MAS to record pertinent case file
information and allow QIC access to case file used by MAC.
u Adjusting Appointment of Representation (AOR) requirements for
treating providers in Part C appeals permitting greater access
to appeal process for enrollees.
In addition to the above we believe the following efficiencies and
enhancements could assist overall program performance and satisfaction.
u Institute auto-escalation of Part D appeals. In Medicare Managed
Care (Part C), beneficiary appeals are automatically escalated
to the QIC after a Level 1 denial. However, with the exception
of when a Part D plan misses its processing time frame, the
beneficiary, or the prescriber on behalf of the beneficiary, is
required complete an appeal request for Level 2 (IRE) Part D
appeals. We believe this is a significant barrier for
beneficiaries and is one of the likely reasons for the lower
volume of Part D appeals. Allowing auto-escalation of Part D
appeals to the IRE when the plan issues a redetermination
denial would eliminate the burden on beneficiaries and their
prescribers to take affirmative action, under tight deadlines,
to continue the appeals process.
u Initiate coordination with Part D plans, enrollees and past
employers to assist in addressing Part D Late Enrollment
Penalties (LEPs). A reason for the high volume of LEP appeals
is that at the time of joining a Part D plan, it is not 100%
established whether a new member to the plan has had prior
creditable coverage. This often leads to an LEP being assessed.
Through the appropriate facilitation of communication between
the new member, the entity proving prior coverage, if any, and
the Part D plan, we believe an accurate creditable coverage
determination can be made immediately upon enrollment,
resulting in many fewer LEP appeals.
u Administratively establish a RAC/Audit Contractor only QIC in
conjunction with administrative RAC (AdRAC) responsibilities.
Along with processing RAC/Audit Contractor appeals the RAC QIC
would provide support services to providers as well as a system
to allow providers information on case status and other case
related information including a customer services center and
portal to provide stakeholders access to case status and other
case processing information. Similar to the specialized teams
we created to address the increase in volume we believe a RAC/
Audit Contractor only QIC would ensure the most consistency for
the program as well as a centralized resource to assist with
program oversight and provider education.
u Create a RAC/Audit Contractor only ALJ unit while providing ALJs
appropriate subject matter support such as nurses, physicians,
certified coding specialists to assist ALJs in making
determinations. We believe this will assist in ensuring
consistent decisions and provide resources to significantly
reduce existing backlog in a timely manner.
u In lieu of providing ALJ SME support, allow QICs to participate in a
greater percentage of hearings. QIC hearing participation
generally results in a significantly lower overturn rate at the
ALJ level and provides appropriate subject matter expertise at
the hearing.
u Have ALJ cases wherein a provider appellant submits new evidence
remanded to the QIC for re-review. This will ensure the
complete record is reviewed and will assist in reducing ALJ
volumes.
u Change Audit Contractor pricing to a per case review as opposed to
contingency pricing.
u Continue transition to fully electronic communication and access to
case files between all appeal levels. Fully electronic
communication and access to a case will provide the program
significant time and cost efficiencies while ensuring access to
the complete case file. Currently, QICs are required to provide
ALJs with paper case files, even though the QICs most likely
received the case as electronic records. This means we are
receiving electronic records and printing; organizing;
packaging; shipping the files. Then ALJ must unpackage,
organize, store, and retrieve paper files as opposed to placing
electronic files in an electronic folder.
u Enhance the Scope of Work of the AdQIC making it responsible for the
consistent and uniform application of all Medicare policies
that relate to reviewing provider and supplier claims for
medical necessity.
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
WASHINGTON--Senate Finance Committee Ranking Member Ron Wyden, D-Ore.,
today made the following statement at a Senate Finance Committee
hearing examining the Medicare's appeals process:
Since the days when I was director of the Oregon Gray Panthers,
seniors and their providers have been frustrated by what they
considered to be the arbitrary nature of the appeals process. Back
then, everybody was in the dark. Nobody knew what the rules were. There
were no deadlines.
Since the days when I was director of the Oregon Gray Panthers,
seniors and their providers have told me how frustrating it is to work
with the arbitrary nature of the appeals process. Back then, everybody
was in the dark. Nobody knew what the rules were. There were no
deadlines.
Some of those problems have been addressed. But today, the system
is still broken and there are new problems to confront. Today, the
backlog of cases is so enormous that the door to new appeals is closed;
new cases are no longer being heard. Nobody is immune. Certainly not
Oregon, where the problem of clogged appeals is sadly real and is
something I hear about from frustrated seniors and providers alike.
The Committee will hear a lot of statistics and big numbers today
that illustrate the point. An important one is this: the number of
cases sent to the Office of Medicare Hearings and Appeals has soared
from 60,000 in fiscal year 2011 to 654,000 claims in fiscal year 2013.
That's an astonishing 10-fold jump in only two years.
One number that hasn't changed, however, is the number of hearing
officers handling cases. Today, approximately 60 hearing officers are
available to consider these cases, just as it was back in 2011. It's no
wonder that the appeals system is buckling under its own weight and
that the average time to process a claim is now 560 days.
Those are important reference points. But the most important fact
is, that amid the blizzard of numbers and statistics, each case is the
story of an actual person. Every case. Every time.
Let's not forget stories like the late Stephen Lessler. Like many
seniors, he had hip surgery and in 2013 he went to a nursing home for
rehabilitation. About one month into his rehabilitation, Mr. Lessler
was notified that his coverage under Medicare Advantage would soon
stop. Encouraged by the progress he was making, he ultimately decided
to pay out-of-pocket for another week. He also appealed the denial to
Medicare.
The process was lengthy and arduous. After losing earlier appeals,
Mr. Lessler requested a hearing before an administrative law judge in
December of 2013. Not until August of 2014--277 days later--did he
actually receive his hearing. Eventually Mr. Lessler did receive a
favorable ruling--on Sept. 24, 2014. Unfortunately, he passed away the
day before, Sept. 23, 2014. He was 92 years old.
We have a duty to ensure that seniors receive the care they are
rightfully entitled to receive under Medicare. We also have an equal
duty as custodians of taxpayer dollars to ensure those dollars are
spent in the best possible manner. To balance both these goals we need
some fresh thinking.
One idea is to allow less complicated and contested cases to be
handled by a different set of hearing officers so that they can be
processed more quickly. That will leave the more complicated and
difficult cases to administrative law judges. Another idea is to
establish a refundable filing fee to prevent providers who are gaming
the system from crowding out people whose cases need to be heard.
I want today's witnesses to offer ideas for reforming Medicare's
appeal process. I want to hear from the witnesses their thoughts on
solving this problem. We need to squeeze every drop of efficiency out
of our current system, but with a 10-fold increase in the number of
cases, it's clear that additional resources are needed too. We need to
reduce the time it takes for an appeal to make its way through the
system. And finally, we need to prevent appeals from even happening by
getting it right the first time.
Mr. Chairman, all of these issues need to be addressed. I thank you
for calling this hearing today and I look forward to the testimony and
positive changes it will bring for all those who rely on Medicare.
______
Communications
----------
American Occupational Therapy Association, Inc. (AOTA)
4720 Montgomery Lane, Bethesda, MD 20814-1220
301-652-2682 301-652-7711 fax 800-377-8555 TDD
www.aota.org
May 12, 2015
Chairman Orrin G. Hatch Ranking Member Ron Wyden
Senate Committee on Finance Senate Committee on Finance
219 Dirksen Senate Office Building 219 Dirksen Senate Office Building
Washington, DC 20510 Washington, DC 20510
Dear Chairman Hatch and Ranking Member Wyden,
Mr. Chairman, Ranking Member, and distinguished members of the Senate
Finance Committee, the American Occupational Therapy Association (AOTA)
is pleased to submit, for the record, a statement per the hearing on
April 28, entitled ``Creating a More Efficient and Level Playing Field:
Audit and Appeals Issues in Medicare.''
AOTA is the national professional association representing the
interests of more than 185,000 occupational therapy practitioners and
students. The practice of occupational therapy is science-driven,
evidence-based, and enables people of all ages to live life to its
fullest by promoting health and minimizing the functional effects of
illness, injury, and disability. Occupational therapy practitioners and
their patients are greatly impacted by Medicare rules and payment
policies. With that in mind, AOTA appreciates the opportunity to voice
its concerns over the audit and appeals process in Medicare.
As you may be aware, Section 3005 of the Middle Class Tax Relief and
Job Creation Act of 2012 established a new review process for
outpatient therapy claims, where claims over a threshold amount of
$3,700 were made subject to manual medical review. The requirement was
initially approved for 2012, and has been extended through 2017, most
recently with the passage of the Medicare Access and CHIP
Reauthorization Act in April of 2015.
Providers are encountering enormous challenges with respect to the
medical review process, including major delays, overly burdensome
documentation requests (ADRs), insufficient rationale for denials, and
delays due to significant backlogs in the appeal process. As a result,
beneficiary access to medically necessary outpatient therapy is being
threatened. Increasingly, we hear that patients are stopping or
interrupting therapy prematurely, a trend that will undoubtedly
increase the chances of more costly health episodes and
rehospitalization.
AOTA continues to be concerned with the appeals backlog and its impact
on occupational therapy practitioners, hospitals, and post-acute care
facilities that provide critical, medically necessary therapy services
to Medicare beneficiaries. When the Centers for Medicare and Medicaid
Services (CMS) suspended the ability of Recovery Auditor Contractors
(RACs) to request documents for claims review until completion of the
procurement process for new RAC contracts on February 18, 2014, CMS
assured health care providers that the pause in additional
documentation requests (ADRs) would permit CMS to wind down current RAC
contracts and allow the RACs to finish any outstanding claims reviews.
To date, AOTA has seen no evidence that the outstanding claims have
been resolved, leaving significant numbers of health care providers in
limbo for well over one year.
Further, CMS stated that the suspension would help efforts to improve
the RAC program and review ADR processes, including limits, time frames
and communications between Recovery Auditors and providers. Appeals
processes in all areas on the legal, regulatory and legislative systems
are subject to fair and specific time frames for review, yet CMS has
been granted an exception from any such rules. The livelihood of
occupational therapy practitioners and other providers of Medicare
services are being threatened by this exception.
AOTA urges Congress to act to require CMS to resolve outstanding
Medicare provider claims in an equitable and efficient manner. The
recently passed Medicare Access and CHIP Reauthorization (MACRA) Act
(Public Law No: 114-10) includes changes to the outpatient therapy
services manual medical review process and appears to provide
flexibility to CMS as it pertains to reviewing claims above the $3,700
threshold by enacting a ``targeted'' review process. AOTA is hopeful
that the provision s contained in Public Law No: 114-10 will, in fact,
improve the current process for outpatient therapy medical manual
review by (1) reducing the Medicare appeals backlog and (2) identifying
true bad actors that are improperly providing therapy services that are
not medically necessary.
AOTA appreciates the opportunity to provide this comment to Congress as
it contemplates methods for easing the Medicare appeals backlog. Please
contact me at [email protected], if we can be of any future assistance.
Sincerely,
Tim Casey
Director of Federal Affairs
American Occupational Therapy Association, Inc.
______
National Association for Home Care and Hospice
Representing the Nation's Home Health Agencies, Home Care Aide
Organizations, and Hospices
228 Seventh Street, SE, Washington, DC 20003
202-547-7424 202-547-3540 fax
Denise Schrader, RN, MSN, NEA-BC Val J.
Halamandaris, JD
Chairman of the Board President
April 28, 2015
The National Association for Home Care and Hospice (NAHC) is the
leading association representing the interests of the home care and
hospice community since 1982. Our members are providers of all sizes
and types from the small, rural home health agencies to the large
national companies, including government-based providers, nonprofit
voluntary home health agencies and hospices, privately owned companies,
and public corporations. NAHC has worked constructively and
productively with Congress and the regulators for three decades,
offering useful solutions to strengthen the home health and hospice
programs.
As the Senate Finance Committee conducts a hearing on ``Creating a
More Efficient and Level Playing Field: Audit and Appeals Issues in
Medicare,'' NAHC appreciates this opportunity to provide our views. We
agree with the Chairman and Ranking Member that when Medicare
contractors deny claims, the adverse effect on beneficiaries and
providers makes it so important that Medicare appeals be heard in a
timely and consistent fashion.
As you know, under Medicare law a decision must be issued by a
Medicare Administrative Law Judge (ALJ) within 90 days following the
filing of the appeal by the Medicare beneficiary or provider. However,
the appeal system is irreparably backlogged with nearly 900,000 appeals
pending review before a handful of ALJs. With stepped up claims reviews
in all provider sectors in Medicare, the number of appeals has
increased exponentially. Despite efforts by the Office of Medicare
Hearings and Appeals (OMHA) to expand the number of ALJs and achieve
greater efficiencies in processing appeals, with 14,000 new appeals
filed every week, a decision on any current ALJ appeal is years away.
Alternative remedies must be considered as a means to reduce
erroneous claim denials and resulting appeals. NAHC recommends the
following:
1. CMS should take all necessary steps to improve the quality and
accuracy of initial claim determinations to limit the need for an
administrative appeal;
2. CMS should monitor its contractors that handle early-stage
administrative appeals to ensure a high degree of accuracy and to
reduce the number of appeals that end up before an ALJ;
3. CMS should provide a settlement option to all appellants with
claims pending before an ALJ in order to reduce the backlog. That
settlement should be based on historical data on ALJ reversal rates and
the cost savings achieved by Medicare coming through the avoidance of
an ALJ appeal; and
4. OMHA should increase its resources to handle the level of
demand and establish alternative dispute resolution processes to
resolve some appeals.
NAHC wishes to thank the Committee for its leadership in addressing
this urgent issue. We are open and available to the Committee to help
in any way we can to resolve the Medicare appeals backlog.
______
The Orthotic and Prosthetic Alliance
1501M Street, NW., 7th Floor
Washington, DC 20005
Phone: 202-466-6550
Fax: 202-785-1756
Email: [email protected]
April 28, 2015
Chairman Hatch, Ranking Member Wyden, and Members of the Committee:
On behalf of the Orthotic and Prosthetic (``O&P'') Alliance, a
coalition of the leading national organizations representing the
orthotic and prosthetic profession, thank you for the opportunity to
submit testimony for the written record with respect to the hearing
entitled, ``Creating a More Efficient and Level Playing Field: Audit
and Appeals Issues in Medicare,'' held by the Committee on April 28,
2015.
The five groups listed below on this letterhead comprise the O&P
Alliance and represent the scientific, research, professional,
business, and quality improvement aspects of the field. Collectively,
the Alliance represents over 13,000 O&P professionals and 3,575
accredited O&P facilities. The O&P Alliance advocates for federal and
state policies that improve the practice and quality of orthotic and
prosthetic care and maximize access to these services provided to
patients in need of artificial limbs and orthotic braces. The
Alliance's priorities include ensuring patients receive services from
appropriately trained, educated, and credentialed practitioners, and
promoting fair and equitable coverage and reimbursement policies,
including fair and equitable audit and appeals procedures.
As the Committee considers recommendations for improving the
Medicare auditing system as well as the extreme backlog and resulting
delay in Administrative Law Judge (``ALJ'') hearings under the Medicare
appeals process, we would like to express our concerns about certain
proposals and our support for others. In addition, we wish to call your
attention to bipartisan legislation introduced by Senator Grassley and
Senator Warner to improve the Medicare audit and appeals process for
O&P providers and patients.
Entitled the Medicare Orthotics and Prosthetics Improvement Act of
2015 (S. 829/H.R. 1530), the bill would, among other things, link
Medicare billing privileges with the level of education and training of
the O&P provider or supplier. This legislation would implement long-
overdue federal regulations that would significantly prevent fraud and
abuse in this area while improving the quality of patient care. We
discuss this legislation in depth later in this written testimony.
background
Like many provider groups, O&P practitioners have experienced
extensive auditing of Medicare claims over the past several years
initiated by all Medicare contractors, especially Recovery Auditors
(commonly known as ``RACs'' or ``RAs''). The impetus for this activity
in the O&P context stems largely from the publication of an HHS Office
of Inspector General (OIG) report in 2011 entitled, Questionable
Billing by Suppliers of Lower Limb Prostheses (OEI-02-10-00170).
However, this report seriously overstated the extent of improper O&P
claims based on a highly technical reading of required documentation to
support a claim.
Based primarily on this report, CMS changed its documentation
standard, without public notice and comment, for O&P claims, stating in
an open letter to Medicare physicians, ``It is the treating physician's
records, not the prosthetist's, which are used to justify payment,''
and applying this new policy retroactively to challenge claims filed up
to 2 years (back to August 2009) before the change was announced. This
``Dear Physician'' letter was interpreted by Medicare contractors and
Administrative Law Judges to mean that the clinical records of the
prosthetist were largely irrelevant and were not even considered part
of the medical record of the patient.
As a result, the OIG (in subsequent reports) and Medicare
contractors began denying rafts of prosthetic limb claims because they
were ignoring the detailed clinical notes of prosthetists and solely
basing the medical necessity of the claim on the notes created by the
physician alone. Many physicians rely on the prosthetist as an integral
part of the rehabilitation team to recommend appropriate prosthetic
care and do not routinely record extensive documentation in their
notes. Over the past several years, denials stemming from this
situation have caused tremendous financial strain on prosthetic and
orthotic providers, large and small, with numerous facilities closing
their doors or reducing capacity to serve Medicare beneficiaries. This
has also had a chilling effect on prosthetic prescriptions; whereby,
Medicare beneficiaries are simply not getting access to the most
functional and appropriate prosthetic technologies available to them.
Therefore, limiting the beneficiary activity level in this way may
increase the risk of comorbidity.
discussion of recommendations
In attempting to address the severe backlog of ALJ hearing
requests, a number of recommendations have been proposed, including the
creation of refundable, per-claim filing fees and remanding appeals
when new evidence is submitted. There has also been discussion of
changes to the way in which recovery auditors are paid. We would like
to address each of these points individually.
Refundable Filing Fees
It has been recommended by a number of the witnesses at this
hearing that one way to reduce the volume of hearing requests would be
to institute a per-claim, refundable filing fee. Such filing fees would
be refundable if the appellant prevailed on its appeal. The
acknowledged aim of instituting such filing fees is not to speed up the
hearing process or otherwise address the root causes of the appeals
backlog but rather to simply discourage providers and suppliers from
appealing denied claims. Thus, the true purpose of such filing fees is
to erect additional financial barriers between potential appellants and
their right to due process. For this reason, the O&P Alliance urges
Congress not to implement this provision in future Medicare audit and
appeals legislation.
Furthermore, making filing fees refundable is not an adequate step
to mitigate the harm done to the potential appellant's rights. The
reason so many providers and suppliers appeal is because of the
significant financial harm they experience when Medicare claims are
denied and the funds are recouped. At the point where an appellant
reaches the ALJ hearing level, the reimbursement due for the claim has
either never been paid (in the case of pre-payment denials) or has been
recouped. With the lengthy delay in securing an ALJ hearing and
decision, the financial strain is compounded. Adding further to this
financial strain by requiring payment of a filing fee could be a
significant deterrent for providers and suppliers to pursue their
rights to appeal, especially smaller entities without the financial
resources to withstand the loss of significant income from Medicare
claims.
The institution of filing fees will have a disproportionately
negative effect on those providers and suppliers that are most impacted
by Recovery Auditors and other audits. It has been noted that a large
portion of ALJ hearing requests are submitted by a relatively small
number of providers and suppliers. If these data are accurate, we do
not believe that this reflects bad actors ``gaming'' the appeals
system. Rather, we believe this reflects the impact of focused and
potentially discriminatory auditing by the RAs and other contractors.
As noted previously, the O&P community has itself been a major target
for such concentrated auditing. We believe that the targeted auditing
carried out by the RAs has created the circumstances that lead
particular providers and suppliers to appeal large numbers of claim
denials.
We also believe that the concentration of appeals amongst a
relatively small number of providers and suppliers reflects the
economic realities of the audit and appeals process as a whole.
Providers and suppliers must dedicate additional resources to
addressing audits as a matter of course. But the draw on resources
becomes quite burdensome when dealing with targeted audits, such as
those initiated by the RAs. And, even before the ALJ hearing backlog
exploded, it takes a certain amount of resources--administrative and
financial--to pursue appeals of claim denials. Now, with the backlog,
the draw on provider and supplier resources during the appeals process
is enormous. Not all providers and suppliers are equipped to handle
such a drain, and many opt to forgo claim appeals past a certain point
or altogether.
Just as not all providers are equal in their available resources,
not all claims are equal in the potential benefit to be gained from
appealing. Providers and suppliers must engage in careful cost-benefit
analysis when determining whether and how far to appeal many claims to
avoid wasting precious resources. Thus, depending on the type of claims
audited, certain providers and suppliers will have greater resources
for and impetus to pursue appeals. Far from exhibiting any sort of
underhanded or abusive behavior by health care entities, this pattern
more likely reflects that legitimate providers with multiple denials
are exercising their due process rights to appeal for a more objective
determination before an ALJ.
Remand of Appeals When New Evidence Is Submitted
Several witnesses at the hearing recommended remand of appeals when
new evidence is submitted at the ALJ hearing. While this approach could
be workable when new evidence is submitted without good cause, it
becomes impractical and entirely punitive when applied where good cause
for the submission of new evidence does exist.
First, under the current appeals instructions issued by the Office
of Medicare Hearings and Appeals (``OMHA'') and in light of the extreme
ALJ hearing backlog, remanding appeals is completely unworkable. At
this time, appellants are instructed by OMHA to hold off on submitting
any additional evidence until their appeals are assigned to an ALJ.
This policy makes sense as it is only the ALJs who may make a
determination as to whether good cause for accepting the new evidence
exists. However, if an appellant is to wait 28 months (or more) to have
an ALJ assigned, then wait to receive a ruling on the good cause of the
submission, only to be sent back to the Qualified Independent
Contractor (``QIC'') or even the Medicare Administrative Contractor
(``MAC'') once good cause is determined to exist, the process
completely breaks down.
Under such a system, the appellant, who has established good cause
for failing to previously submit the new evidence, is bounced from the
critical ALJ hearing it has waited years to schedule, only to restart
the process all over from the end of the backlog. The alternative, of
course, is to pressure the provider into proceeding with the ALJ
hearing without the admission of relevant evidence that was not
previously available for good reasons, prejudicing the outcome of the
provider's appeal.
In addition, a system requiring remand of appeals with new evidence
ignores the realities of the appeals process which allows QICs to issue
claims denials for reasons wholly unrelated to any rationale for
denying the claim provided by the lower-level contractor (i.e., the
MAC). We believe this routine practice by the QIC negates the value of
the multi-level appeals process, instead creating one new hurdle after
another for providers and suppliers. We believe this practice is a
major factor in creating a virtually useless set of lower-level
appeals, feeding the delay at the ALJ level. By preventing an appellant
from introducing new evidence at the ALJ hearing to address reasons for
denial raised for the first time by the QIC without risking being sent
back to a lower level of appeal, this proposal will only exacerbate the
impact of this inequitable practice and unfairly punish providers and
patients seeking due process.
Payment of Contingency Fees
While the O&P Alliance has serious concerns about the utility and
equity of some of the proposals that are the subject of this hearing,
we strongly share the concerns raised by the witnesses and members of
the committee about the payment of contingency fees to the Recovery
Auditors. As acknowledged by the witnesses, the recovery auditors'
auditing activity has been a major driving force in creating the ALJ
appeals backlog. The simple addition of the RAs as a new auditing
entity in 2010 is not what has caused the backlog, however. Instead,
the financial incentive (i.e., contingency fees) that the RAs have to
deny as many Medicare claims as possible is the driving factor in
generating the volume of appeals currently choking the administrative
appeals system.
The RAs have significant financial motivation to deny even those
claims that may be overturned on appeal, taking a chance that the
provider or supplier will opt not to appeal or will otherwise make an
error in the appeals process that compromises the chance of prevailing.
Therefore, the O&P Alliance strongly supports a legislative change that
would eliminate the contingency-based payment system for the Recovery
Auditors.
medicare orthotics and prosthetics improvement act of 2015
In addition to the proposals discussed at the hearing, legislation
has been proposed to alleviate some of the problems that exist with
respect to the audit and appeals process. With respect to O&P services
specifically, the Centers for Medicare and Medicaid Services (``CMS'')
could take several additional steps to curtail payment of inappropriate
O&P claims, without the need for post-payment auditing and any
accompanying appeals. CMS has failed to implement claims edits related
to qualified practitioners and suppliers of custom orthotics and
prosthetics that were mandated by Section 427 of the Beneficiary
Improvements and Protection Act of 2000 (``BIPA'').
CMS has not implemented regulations for this section of the federal
law for the past 15 years, since passage of BIPA in the year 2000. The
Medicare Orthotics and Prosthetics Improvement Act of 2015 (S. 829)
directs CMS to finally issue these regulations. The O&P Alliance
encourages Congress to enact this legislation and compel CMS to finally
implement this federal law. Linking Medicare billing privileges to the
qualifications of the O&P practitioner--as BIPA Section 427 clearly did
and S. 829 clearly does--will not only curtail overpayments for custom
orthotics and prosthetics but will improve the quality of patient care
provided to Medicare beneficiaries.
The legislation also clarifies that O&P practitioners' notes are
considered to be part of the medical record. This provision will serve
to halt many of the incorrect claim denials issued by the RAs and
Durable Medical Equipment (``DME'') MACs \1\ on the basis of an
erroneous understanding of what constitutes the patient's medical
record. Many of the O&P claims currently pending appeal stem from this
misunderstanding, and statutory clarification could serve to eliminate
a high volume of future appeals on the same basis.
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\1\ DME MACs are the lower level contractors responsible for
processing DME and O&P claims, similar to the general MACs with respect
to hospital and physician claims.
S. 829 contains two additional provisions, both of which are
significant. First, the bill creates a separate section of the
regulations that distinguishes the Medicare rules applicable to durable
medical equipment suppliers from those applicable to orthotic and
prosthetic providers. Too often CMS applies regulations designed to
address DME problems to O&P providers in a manner that is inappropriate
considering the very different services provided by orthotists and
prosthetists. This bill will enable CMS to distinguish and separately
treat O&P and DME in a manner that will benefit patients and the
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providers who serve them.
Second, the bill seeks to clarify Congressional intent with respect
to ``off-the-shelf'' (OTS) orthotics. Most orthotics--except for OTS
orthotics--and all prosthetics are exempt from Medicare competitive
bidding. CMS has inappropriately defined off-the-shelf orthotics
expansively by misinterpreting the term ``minimal self-adjustment.''
Contrary to limiting OTS orthotics to those devices that only require
minimal self-adjustment, as the statute requires, CMS has stated in
regulation that orthoses that can be adjusted by the beneficiary,
caretaker, or certain suppliers qualify as ``off-the-shelf.'' This is a
facially-invalid interpretation of this term and could lead to the
elimination of clinical services being provided with a wide swath of
orthoses that require appropriate fitting by a qualified provider in
order to function properly.
conclusion
The O&P Alliance believes that many of the modifications to the
Medicare audit and appeals process discussed during this hearing are
little more than additional barriers designed to discourage legitimate
providers from pursuing their right to appeal claim denials. Contrary
to the name of this hearing, we believe provisions such as refundable
filing fees and remand of appeals when new evidence is submitted do not
level the playing field, but only make it steeper for providers to
obtain due process.
However, there is one major exception. The O&P Alliance strongly
supports the elimination of contingency fee payments to Recovery
Auditors which create powerful financial incentives to deny Medicare
claims. The O&P Alliance also supports the specific provisions in the
Medicare Orthotics and Prosthetics Improvement Act, S. 829, and urges
the committee to pass this legislation. This bill is designed to
implement long-overdue regulations to reduce fraud and abuse and
improve the quality of O&P patient care, while recognizing the
professionalism and clinical care provided to Medicare beneficiaries by
orthotists and prosthetists.
Thank you for the opportunity to submit this statement for the
written record.
Submitted on May 12, 2015 by Peter W. Thomas, J.D.
([email protected]; 202-466-6550), Counsel to the Orthotic and
Prosthetic Alliance.
_______________________________________________________________________
American Academy of Orthotists and Prosthetists (AAOP)
American Board for Certification in Orthotics, Prosthetics, and
Pedorthics, Inc. (ABC)
American Orthotic and Prosthetic Association (AOPA)
Board of Certification/Accreditation, International (BOC)
National Association for the Advancement of Orthotics and Prosthetics
(NAAOP)
[all]